Since March 2022, traders and so-called analysts have been forecasting a policy change or pivot from the United States Federal Reserve. 

Apparently, such a move would prove that the Fed’s only available option is to print into oblivion, further diminishing the value of the dollar and enshrining Bitcoin (BTC) as the world’s future reserve asset and ultimate store of value.

Apparently.

Well, on Nov. 2, the Fed raised interest rates by the expected 0.75%, and equities and crypto rallied like they usually do.

But this time, there was a twist. Prior to the Federal Open Market Committee (FOMC) meeting, there were a few unconfirmed leaks stating that the Fed and White House were considering a “policy pivot.”

According to comments issued by the FOMC and during Jerome Powell’s presser, Powell emphasized that the Fed is aware of and monitoring how policy is impacting markets and that the latency of interest rate hikes is being acknowledged and considered.

The Fed stated:

“In order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

Sounds a bit pivot-y, no? The crypto market seemed to think not, and shortly after Powell gave his live comments, Bitcoin, altcoins and equities retracted their brief single-digit gains.

The shock here is not that Bitcoin’s price pulled back prior to the FOMC meeting, rallied after the estimated hike was announced and then retracted before the stock market closed. This is to be expected, and I wouldn’t be surprised if BTC returns to the lower end of $21,000 since $20,000 appears to be solidified as support.

What is surprising is there was a dash of pivot language, and markets didn’t react accordingly. Let that be a lesson on buying into narratives too deeply.

In my opinion, trading the FOMC, consumer price index (CPI) and rate hikes is not the way to go. Sure, if you’re a day trader, have deep pockets to benefit from those 2% or 4% moves or are an experienced, skilled professional trader, then go for it. But, as shown in the following chart from Jarvis Labs, trading FOMC and CPI really can just chop traders up.

BTC price action before and after FOMC events. Source: Jarvis Labs

I’m of the mind that intraday price moves from Bitcoin on a less-than-daily time frame are irrelevant if your motive is to be long on Bitcoin and increase the stack. So, instead of focusing on micro events like how the Fed continues to raise rates, a policy it is resolute on until inflation drops to its 2% target, let’s look at other metrics that assess Bitcoin’s current market structure and projected performance.

Related: Why is Bitcoin price up today?

On-chain data suggests it’s time to accumulate

Bitcoin Yardstick metric. Source: Glassnode and Capriole Investments

On Nov. 1, Capriole Investments founder Charles Edwards debuted a new on-chain metric called the Bitcoin Yardstick. According to Edwards, the metric takes “Bitcoin Market-Cap / Hash-Rate, and normalized (divided by) the 2 year average” to essentially take “the ratio of energy work done to secure the Bitcoin network in relation to price.”

Edwards explains that “lower readings = cheaper Bitcoin = better value,” and, in his opinion:

“Today we are seeing valuations unheard of since Bitcoin was $4-6K.”

Similar to Glassnode’s recent report, Edwards also believes that long-term holders have already capitulated. After citing the chart below, Edwards said:

“Net unrealized profit and loss (NUPL) is showing a washout in long-term holders. We have entered the capitulation zone (red) seen only once every 4 years in the past.”

As discussed in last week’s Bitcoin on-chain update, multiple on-chain metrics are at multi-year lows, and there is sufficient precedent to suggest upside gains far outweigh the downside potential at the moment.

Did Bitcoin’s MACD histogram turn bullish?

Another metric causing a buzz in trader circles is the moving average convergence divergence (MACD). Throughout the week, multiple traders cited the indicator, noting a convergence between the signal line and MACD and the histogram turning “green” on the weekly timeframe as encouraging signs that Bitcoin is in a bottoming process.

BTC 1-week MACD. Source: TradingView

While the indicator is not meant to be interpreted as a pure signal in isolation, crossovers on the weekly and monthly time frame, along with the histogram flipping from red to green, have usually been accompanied by a steady uptick in bullish momentum.

While data is unable to confirm whether a market bottom is truly in, comparing the current readings to previous market cycles and Bitcoin’s price action does suggest that BTC is undervalued in its current range.

BTC’s price may be carving out a bottom, but this does not rule out the possibility of the occasional crypto- and equities market-related sell-off that could catalyze a swift wick down to the yearly low.

This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey will write market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.