Crypto traders are warned against heavy leveraging prior to the FOMC meeting, citing it as a recipe for losses. Following the Fed’s announcement of unchanged interest rates, Bitcoin and other cryptocurrencies saw price fluctuations. Experts predict caution in trading strategies, as recent gains may not be sustainable in the long term.

A prominent crypto trader has advised against using heavy leverage ahead of the Federal Open Market Committee (FOMC) meeting, labeling it a guaranteed means to incur losses. The Federal Reserve’s announcement, confirming a hold on interest rates in the range of 4.25% to 4.5%, did not significantly impact Bitcoin’s price as it was largely anticipated.

Following Fed Chair Jerome Powell’s comments indicating a low probability of recession, the crypto market responded positively, catching short-sellers off guard. Michael van de Poppe, founder of MN Trading Capital, remarked that this scenario was “a guaranteed recipe to lose money.” Data from CoinGlass reveals that $188.77 million was liquidated within a 12-hour span, predominantly affecting short positions.

Bitcoin experienced a 3.84% spike in price shortly after Powell’s statement, peaking at $87,427 before settling around $85,760. Similarly, Ether and XRP observed gains of 2.27% and 2.40%, respectively. Van de Poppe emphasized that Powell’s remarks would significantly influence Bitcoin’s price movements in the coming period.

Crypto trading account BitcoinHyper noted that the FOMC meeting caused Bitcoin to rally directly into a critical liquidation level, cautioning against new long positions at this time. Matt Mena from 21Shares echoed this sentiment, projecting that any short-term surge resulting from the Fed’s dovish stance may lack sustainability. Mena expressed that Bitcoin is likely to remain stagnant until a clearer catalyst emerges, although the broader macroeconomic outlook still seems favorable for Bitcoin in the long term.

Powell indicated that FOMC members foresee interest rates decreasing to 3.9% by the end of 2025 and further to 3.4% by the end of 2026. This article does not constitute investment advice, as all investment activities carry inherent risks; readers are encouraged to conduct thorough research before making any financial decisions.

In summary, leveraging bets before the FOMC meeting can lead to significant losses, as indicated by various market movements and expert opinions. The latest Fed announcement did not adversely affect Bitcoin, prompting a market rally instead. Experts caution against assuming that this trend will stabilize, advising careful consideration of market conditions and risks. Readers should conduct their own research when navigating investment decisions.

Original Source: cointelegraph.com

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