Bitcoin prices stagnate below $65,000 ahead of Federal Reserve interest rate decision

Falling oil prices ease inflation concerns, but Fed decision remains pending

The sharp fall in oil prices has eased inflation concerns that have plagued the cryptocurrency market recently, but the market is still betting that the Fed may raise interest rates this Wednesday. Stabiloins are re-entering exchanges, indicating buyers are waiting to enter. Bitcoin's moving average on the 4-hour chart continues to put pressure on its price below $65,000.

On Monday, Bitcoin traded around $64,550, maintaining a narrow range below $65,000. Traders are weighing the impact of a sharp drop in oil prices against the risk of a Federal Reserve rate hike this week. Brent crude fell more than 7% to $90 last week after breaking above $100 a barrel, a pullback that eased inflationary trading pressures that had suppressed bitcoin and other risky assets. However, the easing effect is limited because Wednesday's Fed decision remains hanging over the market and futures pricing suggests a rate hike is still possible.

Why falling oil prices provide wait-and-see space for the Federal Reserve

Tensions between Iran and the United States eased last weekend, and the two sides suspended attacks and returned to negotiations, which made the geopolitical premium for crude oil disappear. Brent crude fell to US$90, directly affecting inflation expectations, as energy costs are transmitted through transportation, manufacturing and food sectors. When oil prices soar, headline inflation rises, pushing the central bank to maintain tightening policies. Falling oil prices, on the contrary, provides the Federal Reserve with more room to keep interest rates unchanged or even eventually cut interest rates. This is the background favored by risky assets.

Bitcoin is not directly affected by oil prices, and the correlation between the two runs through interest rate expectations. Raising interest rates will increase returns on cash and bonds, making non-yielding assets such as Bitcoin less attractive on the margins and draining liquidity from the speculative end of the market. According to the Chicago Mercantile Exchange's FedWatch tool, the probability of a rate hike is currently 40%, which is enough to keep traders on a defensive stance no matter how oil prices change next.

Interest rate hikes will tighten the financial environment, and Bitcoin is currently in a fragile technical form. Keeping rates unchanged, especially with mild language about future paths, would remove market pressure and provide room for an upward breakout in the current range. [TAG

Stablecoins are returning to exchanges

Analytical data shows that US investors are moving stablecoins back to exchanges, reversing the outflow trend earlier this month. Stablecoins deposited on exchanges are equivalent to dry powder. Traders leave USDT or USDC on the platform, usually intending to buy rather than wait, so a rising balance indicates that funds are queuing up for entry. This does not guarantee anything, but it sends a signal of "readiness." When this state of readiness meets a market that is compressed within a narrow range, the final market volatility tends to appear with greater intensity.

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Bitcoin's current valuation is only one-quarter of the historical average

Analysts pointed out that based on the MVRV Z-Score indicator, compared with the average price at the time of the last move, the current valuation of Bitcoin is about four times below the historical average, and the Z-Score is close to zero. Such low numbers mean that the average holder is close to the break-even point, with neither large paper profits nor deep losses. This is often an area where sellers who sell out of pain have dried up. But it should be warned that markets have not yet experienced a full capitulation phase-the wave of forced selling that often marks a lasting bottom. Weekly realized profits and losses have returned to positive values, indicating that holders are again starting to make profits rather than cashing in losses. The conclusions are open: this is either the bottom of the recovery or a pause before another decline.

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A dead fork is formed, limiting the height of the rebound

Bitcoin's 4-hour chart clearly shows that the rally from a July 8 low of US$61,564 to a July 21 high of US$66,891 has ended, and then entered a sideways or slightly downward trend for about a week. At the latest close of $64,508, the price was in the upper middle half of the range, slightly above the midpoint. The upward momentum has been exhausted and the market is digesting it.

Moving averages send short-term signals. The 20-cycle SMA (US$64,507) has fallen below the 50-cycle SMA (US$65,054), creating a dead fork in the time frame, indicating that short-term momentum has turned downward. Prices are sandwiched between two moving averages, above the 20-cycle line but unable to break through the 50-cycle line. This 50-cycle line is particularly important because it falls almost exactly above the 0.382 Fibonacci retracement level ($64,857), superimposing the moving average and retracement levels within the same narrow range. Together, the two form a ceiling that blocks two recent attempts to rise.

Above this range, the 0.236 retracement level ($65,634) is a harder wall of resistance. Prices were rejected after hitting that level around July 26 and had to break through to achieve true continuity. Recovering $65,054 and then breaking through $65,634 will turn the short-term outlook into a bullish one. Before then, a rebound to resistance is more likely to be sold than bought.

On the downside, starting from the midpoint of the range of US$64,228. A four-hour close below that level would open the door to the 0.618 retracement level ($63,590), an area that has experienced price reactions on July 24 and 25. Below this, there is little support until $62,704 and the bottom of the range.

The momentum indicator is consistent with the tone of caution, but there are no extreme signals. The RSI is 45.2, which is below the signal line (47.9) and the 50th axis, indicating a moderate downward trend. It is far from oversold and there are no signs of divergence. This is a momentum characteristic of the market's slow downward trend within a range, not a collapse.

The following are the key levels for the currently defined interval:

The overall judgment is neutral and empty. The 0.382 retracement level forms a converging resistance with the 50-cycle SMA, with a dead fork behind it. The path of least resistance points to $64,228 and may even touch $63,590 unless the bulls can recover $65,054. The full range of $61,564 to $66,891 remains in effect until one of the edges is broken by the close price. Given that recent trading sessions have been so tightly compressed, the sharp expansion in the range is noteworthy.

How Wednesday's Fed decision will affect markets

The short-term direction depends on Wednesday. Leaving rates unchanged would strengthen the inflation-easing narrative triggered by falling oil prices and provide a catalyst for markets to challenge the $65,054 to $65,634 range-which has prevented all recent rallies. The balance of stablecoins currently deposited on exchanges is the fuel driving this breakthrough. Raising interest rates, or not raising interest rates but accompanied by hawkish guidance, will put pressure in the opposite direction, pushing Bitcoin down towards support levels of $64,228 and $63,590, which analysts believe are still defensive rather than inevitable.

In addition to the Fed's decisions, month-end portfolio rebalancing and monthly option expiration may trigger fluctuations that have nothing to do with the macro story. The July monthly close will also be completed this week, and Bitcoin's final closing position in the $64,000 region will determine the opening pattern of the candlestick next month. A policy decision, a monthly close and the narrowest range in weeks are all concentrated in the same few days, which is why the second half of the week is more important than the calm price movements suggest.