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Bitcoin price starts the week in the red, what triggered the crash?

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Bitcoin price is moving sideways as October progresses, and the cryptocurrency is experiencing negative volatility. On the lower time frames, the market sentiment is neutral with a rally to the upside, but on the higher time frames, BTC has been stuck in the same range for several months.

At the time of writing, Bitcoin is trading at $19,150 with a 2% loss in the last 24 hours and a sideways movement in the last 7 days. BTC price remains limited at its current levels and with occasional retests of resistance at $20,500 due to macroeconomic conditions.

Bitcoin price BTC BTCUSDT
BTC price trends to the downside on the hourly chart. source: BTCUSDT TradingView

Bitcoin price sees sharp rise in volatility

Bitcoin price was recently rejected from the $20,500 region as the US economy records higher-than-expected levels of employment and flexibility in Federal Reserve (Fed) monetary policy. The financial institution has captured the attention of the financial sector.

The current economic narrative gravitates around the same topics, how far is the Fed willing to go to ease inflation, bringing markets down with it? And how much pain can US allies endure before the financial institution becomes a hub?

From this main narrative, there are various subplots with a possible recession taking center stage. In the crypto sector, there are actors who are already anticipating a rise in the price of bitcoin as central banks maintain their aggressive approach increasing the chances of breaking key components of the global economy.

In this sense, the upcoming FOMC meeting on Wednesday may provide more insight into the institution’s strategy. This event is probably driven by the increased volatility of the bitcoin price.

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In the past, the cryptocurrency experienced a similar price movement before the event, and an upward price movement in the following days. This time around, the US dollar, according to DXY, may act as a short-term headwind against the cryptocurrency.

On the daily time frames, DXY managed to set a new monthly high for October as the currency continues its upward trend. At the time of writing, the dollar appears ready to revisit the area around 115, which could limit the upside potential for bitcoin, and three major global currencies: the Japanese yen, the euro and the British pound.

Bitcoin Price BTC BTCUSDT DXY
The DXY indicator is in an uptrend on the daily chart. source: TradingView

When will the Fed pivot?

In the short term, bitcoin price needs to see a bounce in the US dollar to ease downward pressure. As long as the dollar remains strong, riskier assets and global currencies are likely to trade in the red.

Pressure is already building on the Federal Reserve to halt its monetary policy and interest rate hike programme. From international bodies to hedge funds, the global market is asking for mercy, but the Federal Reserve and its chairman Jerome Powell seem adamant.

On Wednesday, if the Federal Reserve repeats its stance, the price of Bitcoin may continue to see bearish swings. In this scenario, traders should monitor the key support levels at $18,600 and $17,600 to prevent a larger pullback.


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Cryptocurrency

How to keep your cryptocurrency safe after the FTX crash

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The fall of cryptocurrency exchange FTX has forced many to reconsider their general approach to investments — from self-holding to checking for on-chain funds. This shift in approach was mainly driven by the distrust of crypto investors in the entrepreneurs after they were deceived by the CEO and co-founder of FTX. Sam Bankman-Fried (SBF).

FTX crashed after SBF and its partners were caught secretly reinvesting users’ money, leading to a Loss of at least $1 billion of customer funds. Efforts to restore investor confidence have led to rival cryptocurrency exchanges proactively boasting of proving their reserves to confirm the existence of users’ funds. However, community members have since demanded that exchanges demonstrate their commitment to protect reserves.

With SBF, the self-proclaimed “Most Generous Billionaire,” committing fraud in broad daylight with no apparent legal implications, investors must maintain a defensive stance when it comes to protecting their investments. To protect assets from fraud, hacking, and misappropriation, investors must take certain measures to maintain complete control of their assets—often considered a best crypto investing practice.

Transfer your money from cryptocurrency exchanges

Cryptocurrency exchanges are widely used to buy, sell and trade cryptocurrencies for a small fee. While other methods, including peer-to-peer and outright selling, are always an option, the higher exchange liquidity allows investors to match orders and ensure they don’t lose money during a transaction.

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The problem arises when investors decide to keep their money in wallets owned and offered by the stock exchanges. Unfortunately, this is where most investors learn the “not your keys, not your coins” lesson the hard way. Cryptocurrencies that are stored in wallets provided by the exchange are ultimately in the possession of the owner, which in the case of FTX users, has been abused by the SBF and its partners.

Avoiding these risks is as simple as moving funds from an exchange to a wallet without shared private keys. Private keys are secure cryptocurrencies that allow access to funds stored in crypto wallets, which can be recovered using a backup phrase in case they are misplaced.

Hardware wallet: The safest bet for storing cryptocurrency

Hardware wallets provide complete ownership of the private keys of a crypto wallet, limiting the funds’ access to only the owner of the hardware wallet. After purchasing cryptocurrencies from an exchange, users must voluntarily transfer their assets to a file hardware wallet.

Once the transaction is completed, the owners of the cryptocurrency exchange will not be able to access the fund. As a result, investors who choose a hardware wallet will not risk losing money due to scams or hacks that happen across the exchanges.

Related: What is a bitcoin wallet? A beginner’s guide to storing bitcoin

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However, while hardware wallets add to the overall security of funds, cryptocurrencies remain at risk of non-permanent losses when the value of the token falls beyond recovery. Hardware wallet providers have seen a sharp increase in sales as investors slowly move away from storing their assets on exchanges.

Don’t trust, check

In all crypto crashes this year – incl 3ACAnd the Terraform LabsAnd the CelsiusAnd the Voyager And the FTX Breaking investor confidence was a common and obvious theme. As a result, the slogan “Don’t trust, verify” is finally resonating with both new and seasoned investors.

Popular cryptocurrency exchanges, incl BitfinexAnd the binanceAnd the OKXAnd the ByteAnd the Huobi and Gate.io, have taken proactive methods to display proof of their reserves. Exchanges have introduced portfolio information that allows investors to self-check the presence of their funds on the exchange.

While the Proof of Reserve provides a snapshot of an exchange’s reserves, it fails to provide the full picture of its finances because information on liabilities is often not publicly available. On November 26, Kraken CEO Jesse Powell contacted him Binance Reserve Proof of “Either Ignorance or Willful Misrepresentation” Where the data did not include negative balances.

but, Binance CEO Changpeng Zhao He refuted Powell’s claims by saying that the exchange has no negative balances and that will be verified in an upcoming audit.

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The above three considerations are a good starting point for protecting your crypto assets from the bad guys. Some other popular methods are used to take control away from cryptocurrency entrepreneurs Decentralized Exchanges (DEX)And the self-custodial governors (non-custodial) and conducting extensive research (DYOR) on projects that appear investable.