BTC under pressure

Short-term holders have dumped $4 billion worth of BTC over the past 48 hours. Glassnode defines the "STH" subset as those having held coins for fewer than 155 days. Cointelegraph refers to these types as "sodlers." (We're working on a nickname that combines the phrase "Johnny come lately" with the term "weak hands," possibly "Johnny come weaklys.")

Anyway, this more speculative crowd began their selling spree on Monday when the largest crypto shed nearly 8% in merely a few hours. Some $1.93 billion in BTC headed for the exits on Monday. Another $2.08 billion did so on Tuesday. Those figures are from Glassnode, an analytics firm that can track coins leaving the network and flowing to exchanges to be sold. Both days mark long-term highs in short-term selling. In fact, the last time that selling in a single day crossed $2 billion was in June 2022 in the wake of the Terra ecosystem implosion.

With selling pressure running hot, BTC has shed 1.7% in the past 24 hours. It has taken some heavy licks this week (down 6%) but, in a display of steely stoicism, is still hanging on to a $41K handle. It's not unusual for spot price volatility to strike in the days leading to a Federal Reserve interest rate decision. Later this afternoon, the Fed is widely expected to announce a third straight pause in its rate-hiking campaign that started back in March of 2022 when rates were near zero.

Stock futures were up as of 8 a.m. (EST). Fed funds futures traders are pricing rate decreases to start in May 2024 and continue through the year (CNBC).

Meanwhile, Fetch.ai's native FET is one of the few coins in the green as of mid-week. We're not sure why. AI fever is marking one year of being a thing and Chatbot queries are rising, per an old-fashioned Google search.

The U.S. Department of Justice has charged two individuals, David Saffron, an Aussie, and Vincent Mazzotta, a Californian, with scamming $25 million from victims by way of a fraudulent crypto investing pool touted as AI-driven but now labeled by the government as a ponzi. Charges include wire fraud and money laundering.

The pair, the government alleges, ran their scheme via multiple false entities, including one dubbed the “Federal Crypto Reserve.” Among the other aliases that the alleged perpetrators used were "Omicron Trust," "Cloud9Capital" and, most notoriously, "Bitcoin Yoda."

Both men face maximum sentences in the neighborhood of 75 years (Blockworks).

A fresh batch of CPI data released yesterday showed inflation is slowly moderating. Annualized inflation, also dubbed "headline inflation," did indeed dip lower. The CPI number for November was 3.1%. October's number was 3.2%. The Fed hasn't pinned inflation to desired ground (2% annual inflation) but the central bank does seem to have wrestled levels down without a recession.

Now if that's the case, it's a feat (a "soft landing") most economists thought would not happen, which is not to say such a scenario might not yet play out, especially considering potentially unsustainable consumer debt levels.

That there’s virtually no chance central bank policymakers will vote to raise rates later this afternoon is beside the point, CNBC said, emphasizing the intense focus on the Fed Chair's speech which could contain forward-looking economic outlook clues as to what might be coming in 2024 (or maybe not coming).

“This would be the third straight meeting where the Fed remained on hold," said Michael Gapen, a Bank of America economist, penning a macro research note to clients. "In our view, the Fed likely sees itself as done with the hiking cycle,” Gapen said.

And while looser money could inspire a rally for riskier assets, like cryptocurrencies, there remains a formidable near-term hurdle for BTC. And that is the $44K price level. A spot market tug-of-war playing out on a slippery $41.3K floor will test nerves this morning and into the afternoon but the good news for Bitcoin bulls, says Cointelegraph's Marcel Pechman, is that "derivatives indicate that positive momentum hasn't faded."

BTC options skew has stayed neutral (neither overly bullish nor all that jittery) while perpetual futures funding rates remain positive, suggesting that excessively leveraged retail longs didn't pump the rally and cause subsequent liquidations. Which in its own way, lessens the risk of a cascade of liquidations as bulls battle to keep BTC above $40K as global markets get a full read on macro tea leaves throughout today and into tomorrow.