Bitcoin prices fluctuate sideways. Is a rebound of $80,000 expected?

Bitcoin (BTC) and Ethereum (ETH) were trading in their respective 60-day ranges this week after the Federal Reserve voted 9 - 3 to keep interest rates between 3.50% and 3.75%, with three members supporting raising interest rates.

Interest rates remained unchanged in line with market expectations, but analysts remained divided on Federal Reserve Chairman Kevin Walsh's comments at a press conference and his long-term inflation response plan.

Regarding the Federal Reserve's decision to keep interest rates unchanged and subsequent PCE data, Hyblock analysts said: "Weak GDP in the second quarter (1.5% lower than expected) coupled with a cooling in core PCE in June (0.1% month-on-month and 3.3% year-on-year). These data reduce the possibility of raising interest rates. Perfectly in line with our argument: the most likely scenario for the rest of the year is still no interest rate cut, and the probability of a rate cut is greater than the probability of a rate increase."

U.S. Treasury yields initially soared after Walsh's press conference. The 30-year Treasury bond yield hit its highest level since 2007 of 5.2%, and the 10-year Treasury bond yield rose to 4.6%. Stocks initially weakened during the press conference, but PCE data and a weekend rally led by technology and artificial intelligence stocks pushed the market to close higher over the weekend.

Overview

Bitcoin shocks amid rebound in FOMC, PCE and technology stocks

Ethics and consumer protection issues hinder progress of the CLARITY Act

Despite constant negative news, Bitcoin rejects new lows

Focus

Bitcoin shocks amid rebound in FOMC, PCE and technology stocks

Bitcoin failed to keep pace with the stock market rally, falling to a two-week low of $62,466. In addition to normal futures activity, which plays a significant role in Bitcoin price movements, MicroStrategies reported a loss of $8.22 billion due to changes in fair value. The company also reiterated its openness to future sales of bitcoins to increase its dollar reserves, confirming the view that flagship buying by the Bitcoin bank of the market's largest company has actually stopped.

During the second quarter earnings conference call, MicroStrategy Executive Chairman Michael Siler explained why it might sell Bitcoin in the future. He added that upcoming financing may not be used to buy more bitcoin.

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Further deviating from its strategy of purchasing Bitcoin directly, MicroStrategy announced that it purchased 288,930 shares of its Stretch (STRC) perpetual preferred stock for US$25 million on July 27.

On the X platform, the company said: "We intend to maintain regular and disciplined buying when the STRC is below $100." MicroStrategy also explained that "the repurchase will be conducted through funds other than US dollar reserves, including the sale of MSTR and BTC based on market conditions."

Ethics and consumer protection issues hinder progress of the CLARITY Act

On the regulatory front, efforts to push the CLARITY bill to a full U.S. Senate vote appear to have lost momentum, but supporters remain hopeful. Senate Majority Leader John Thun said the goal is to complete the full vote before the August 7 recess. However, unresolved issues related to ethics and consumer protection continue to create friction.

Although the likelihood of the CLARITY bill passing before the U.S. midterm elections has declined, corporate buying of Bitcoin has subsided, and the market remains wary of possible interest rate hikes, the market structure of major cryptocurrencies is still improving. This raises a real question: whether most of the "bad news" has been known by the market and reflected in Bitcoin and the broader cryptocurrency market.

Bitcoin rejects new lows despite negative news

Bitcoin hedges ahead of FOMC meetings, as is customary. Subsequently, it initially synchronized with a rally in risk appetite on the Dow Jones, S & P 500 and Nasdaq. The move comes after news that Citadel bought Situational Awareness's stock portfolio after it suffered huge losses on leveraged AI positions.

Bitcoin's cumulative trading volume Delta showed purchases of US$754 million on July 30. At the same time, the spot BTC ETF attracted approximately $204 million in four days. ETF traffic over the past two weeks suggests that despite negative factors such as microstrategies becoming bystanders in the past five weeks, institutional buying remains weak.

Bitcoin ETF tracker. Source: CoinMarketCap

Futures data showed that leveraged long positions accounted for about 50% of the US$286 million liquidation on July 30. However, funding rates are still biased towards bulls, who still face liquidation risks in the $62,500 to $63,500 range. On the other hand, short traders face the risk of being squeezed in the $64,500 to $65,500 range.

Bitcoin price, total open interest, funding rates. Source: Hyblock

The current view is similar to previous weeks, that open interest is slowly rebuilding after falling 5.2% on July 21. As bulls lowered leverage ahead of the FOMC meeting, they exacerbated Bitcoin's price weakness. Signs of a bearish reversal will include rising open interest and falling prices, and a loss in the $62,000 support level.

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BTC/USDT Clearing Heat Chart. A month to review. Source: Hyblock

Focus

The market rose after the sale of Situational Awareness hedge funds.

If the AI sell-off has bottomed out, will rising risk sentiment spread to cryptocurrencies?

The market seems to have digested the fact that MicroStrategy will become a Bitcoin seller for the foreseeable future, and ETF traffic has been net inflow for two consecutive weeks.

Can futures traders push prices up to $66,000 or higher?

The CLARITY bill may still reach a full Senate vote and then be submitted to President Trump's desk.

Will traders be proactive in trading improved odds or other positive news in Bitcoin, ETH and DeFi tokens?