Bitcoin held above $20,000 a coin on Tuesday. It is even trying to rebound. However, the outcome of the Fed's two-day meeting will be announced today, which could cause a spike in volatility.
The technical targets for BTCUSD now remain at the limits of the horizontal channel of 18,900 - 21,900, to each of which there is now a significant range.
Notably, in addition to the Fed meeting, Bitcoin could be affected by the quarterly report from Meta (Facebook).
Key events of day
Meta, the social media giant, previously known as Facebook, will report its earnings in a few hours. The Wall Street Journal report highlights that the goliath could be heading for the first revenue drop. A bad earnings report from tech stocks can result in a crypto crash.
The report also points out that the company might also report the largest drop in the number of daily users.
As for the Fed, a 100 bps hike could mean a bloodbath for stocks and crypto in general. However, the CME FedWatch tool shows over 70% expectation of a 75 bps hike.
Meta's (Facebook) struggle
Meta shares have slid by about 46% in the last 9 months due to a combination of macroeconomic factors and competition from TikTok. According to the analysts at FactSet, Meta is expected to post earnings of $28.9 billion for the quarter.
Meta has lost more than $400 billion since February. If these losses result in a worse-than-expected earnings report, a crypto crash might follow.
Meta also experienced severe backlash from its recent move to using artificial intelligence for content delivery purposes rather than based only on the followed accounts. Meta has also suffered billions of dollars of losses on its Metaverse project. It is also facing stiff competition from Apple in AR/VR technology.
If Meta's struggle continues, it could miss the second quarter estimates and cause a volatility in the market.
Significance of technology stocks for cryptocurrency
According to Coinbase Research, the correlation between traditional stocks and crypto assets is at an all-time high. They believe that crypto performs similar to technology stocks. Popular investor Michael Berry has the same opinion.
Technology stocks are often the strongest on most portfolios and can result in a lot of havoc in the market.
While Google and Microsoft earnings did not cause any volatility despite narrow estimate misses, Meta's big loss could trigger such an event. Recently, Snap's horrible earning reports caused a lot of market volatility.
Cathy Wood sells stock in Coinbase
Cathie Wood's ARK Innovation Fund have long remained committed to cryptocurrency, and have been actively adding shares in companies related to the industry to their portfolios.
Ark Invest Trading data for July 25 shows that he sold more than 1.41 million shares of Coinbase Global Inc due to poor stock performance amid the bear market and an ongoing investigation by the SEC.
Coinbase shares closed at $52.93 on July 25, after three Ark funds sold part of their portfolio. Sales details were available on your intraday commercial sheet.
On April 14, 2021, Coinbase became the first cryptocurrency exchange to go public after its debut on the Nasdaq. Its share price hit $400 on launch day, but has since dropped to around $52, representing a price decline of more than 85%.
Cathie Wood's Ark Invest purchased 749,205 shares in the amount of $246 million through its AARK, ARKW and ARKF funds on the first trading day.
Following a weak first quarter report from the exchange, its share price declined to $53.72 on May 12, 2022. Ark Invest took the opportunity to increase his holdings totaling 546,579 shares worth about $2.9 million.
The recent decline in Coinbase trading volumes and earnings may have changed Ark's bias from buy to sell. Thus, on July 27, the investment fund announced in its commercial notification that it had completed the sale of 1,418324 Coinbase shares for $75 million.
SEC investigates Coinbase
COIN's declining share price may be related to a growing rift between Coinbase and the SEC. Following allegations against former Coinbase product manager Ishan Wahi for insider trading, the SEC launched an investigation into the publicly traded asset class.
On a July 21 complaint filed against Ishan and his accomplices, the SEC alleged that nine of the digital assets involved in the crime were securities. In response, Coinbase said that their review process is intended to keep values off the platform. Coinbase also advised the SEC to provide a clear regulatory framework for the crypto industry.
The SEC is now investigating Coinbase to determine if it intentionally allowed Americans to trade digital assets that were not registered as securities. According to Bloomberg News, the increase in the exchange's listing may have drawn the attention of the US watchdog.
