Bitcoin (BTC) is facing uncertainty as it enters the last full week of July, with $30,000 acting as a strong resistance level. Traders are eagerly waiting for key events, including the United States Federal Reserve’s decision on interest rates, which could potentially shake Bitcoin out of its month-long trading range.
Despite a brief surge to $30,000, BTC retraced its gains and closed the week at almost exactly $30,000. Overnight, Bitcoin’s price weakened further, heading towards $29,000. The market has offered little indication of where Bitcoin might head next, leaving traders impatient and believing that BTC/USD will eventually break down from current levels and drop to $25,000 or even lower.
Various traders have shared their perspectives on Bitcoin’s price performance. Michaël van de Poppe, CEO of trading firm Eight, highlighted the “crucial area” that bulls need to break through. Daan Crypto Trades pointed out that the spike to $30,300 had closed a CME futures gap. Credible Crypto offered a cautiously optimistic view, suggesting that downside should be limited at the current lows.
The upcoming Federal Reserve’s Federal Open Market Committee (FOMC) meeting on July 26 is the dominant event this week, not just in the crypto market but also in the broader macro landscape. The market expects a rate increase, with the odds currently standing at 99.8%. Other important macro data releases, such as Q2 GDP and the Personal Consumption Expenditures (PCE) Index, will follow the FOMC meeting.
Tedtalksmacro noted that despite the potential interest rate hike, global central bank liquidity conditions appear to be at macro lows, which historically has been positive for Bitcoin and risk assets.
Bitcoin’s mining difficulty is expected to decrease by around 4% at its next automated readjustment on July 26. This drop comes after Bitcoin’s mining difficulty reached all-time highs. The hash rate, another indicator of network fundamentals, has also consolidated after hitting all-time highs. Charles Edwards, founder of Capriole Investments, noted a “capitulation” phase in Hash Ribbons, indicating a slowing in Bitcoin’s hash rate growth. Edwards called the past seven months of explosive growth in hash rate “unsustainable” and emphasized the need for risk management until growth resumes.
The Network Value to Transaction (NVT) Ratio, which measures on-chain volume in relation to network value, has reached four-year highs. However, the implications of this metric can vary, as spikes can occur in both bull markets and periods of unsustainable price growth. Bitcoin’s available supply continues to shrink, with 55% of the supply remaining dormant for at least two years and 29% for five years or more. This suggests that long-term holders, or entities holding Bitcoin for 155 days or more, have strong conviction in the asset.
In conclusion, Bitcoin faces uncertainty as it approaches the end of July. Traders are eagerly awaiting key events such as the Federal Reserve’s interest rate decision and macro data releases. Bitcoin’s price has been largely range-bound, leaving traders impatient and anticipating a potential breakdown. Network fundamentals, such as mining difficulty and hash rate, have shown signs of consolidation. The NVT Ratio indicates that on-chain volume may be out of sync with network value, but its implications can vary. Long-term holders continue to hold a significant portion of Bitcoin’s supply, indicating strong conviction in the asset.