The crypto market could face more volatility during today’s trading session. The U.S. Federal Reserve is set to host its Federal Open Market Committee (FOMC) meeting and possibly announce a hardline approach to combat inflation.

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Inflation metrics have been at their 40-year high versus the U.S. dollar. Thus, investors expect the financial institution to announce a hawkish monetary policy to try and bring down inflation which has been impacting the crypto market and risk-on assets.

At the time of writing, Bitcoin is barely hanging above $20,000 and records a 33% loss in the last week. Ethereum records a 40% loss over the same period with smaller cryptocurrencies trading in the red.

Trading desk QCP Capital recently posted a market update highlighting the levels of panic in the crypto market. As Bitcoin and other larger cryptocurrencies trended to the downside, major crypto companies failed to meet their financial obligations.

The recent evens followed a catastrophic collapse in the Terra ecosystem which already set the stage for a soft market to see further losses. Now, lending and borrowing platform Celsius halted all withdrawals, and Coinbase and BlockFi fired 18% of their personnel.

In a letter to his employees, Coinbase CEO Brian Armstrong spoke of an imminent economic recession. These events contributed to the crypto market selloffs. QCP Capital said:

These are record levels for the year, reflecting the heightened panic in the market as we head into FOMC in a few hours. Markets have revised expectations for the FOMC rate hike from 50 bps to 75 bps. Markets are rightly worried that the Fed might be prioritizing inflation over recession concerns.

In other words, the FED could choose to stop inflation regardless of spilling more blood in the traditional market.

However, QCP Capital believes there is a possibility for some relief in the short term. This move to the upside could be supported by the high amount of leverage positions that suffered liquidations during the recent downside move.

In addition, Bitcoin is trading above its previous all-time high which has often operated as a major area of support. This could provide bulls with more breathing room as selling pressure declines. QCP Capital added:

The market seems to be at max bearishness right now and any dovish indication from Fed could trigger a short squeeze. While everyone is focused on the negative headlines, a sharp move higher could catch the market by surprise.

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The FED meeting will take place in less than an hour and could push Bitcoin and the crypto market back to their pre-2020 range. This could see BTC’s price trading in the $10,000 levels, but as of right now, $20,000 is holding.

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