Bitcoin's potential major surge may be on the horizon, with Powell's policy decisions on tariffs playing a significant role.
Bitcoin Price Fluctuates Amid Tariff Relief and Cautious Fed Policy
In the past month, Bitcoin has experienced a significant surge, with the digital currency printing three consecutive green monthlies. This impressive run has been driven by a combination of factors, including tariff relief from U.S.-China and U.S.-Japan trade agreements and a more favourable market environment.
The tariff rollbacks have eased fiscal pressures, injecting liquidity into global markets and creating a more favourable environment for Bitcoin. This has coincided with rising investor confidence and demand, allowing Bitcoin to defend strong support at around $112,000–$115,000 and surge towards $123,000 by mid-July, registering an 11.31% monthly gain. The tariff relief has also reduced macroeconomic uncertainty, which aligns with more risk-on market sentiment that generally supports higher Bitcoin prices.
However, Bitcoin is currently navigating critical liquidity zones. The $112,000-$115,000 range acts as strong support, while the $123,000 level serves as resistance. Roughly $9.5 billion in short positions cluster at the $123,000 level, making it a potential site for a short squeeze if the price breaches this resistance. On the other hand, if adverse macroeconomic factors intensify, such as cautious Fed decisions or inflation concerns, Bitcoin could retest the lower support zone.
Regarding the Federal Reserve's policy, the market largely expects the Fed to hold interest rates in the 4.25% to 4.5% range, with a 98% probability priced in. The recent Fed decision to maintain rates led to a minor downward price adjustment in Bitcoin, described as "pre-FOMC derisking" rather than a bearish signal, reflecting the market's sensitivity to monetary policy. The Fed’s cautious stance indicates no immediate rate cuts, maintaining a balance between inflation control and growth, which creates an environment of uncertainty for Bitcoin's next move. Additionally, the Fed policy announcement sparked a stronger U.S. dollar and some initial equity market dips, factors that often weigh on Bitcoin.
The upcoming FOMC meeting is expected to provide a fresh read on the economy, with Federal Reserve Chair, Powell, set to deliver his insights. The market is questioning the dovishness of the Fed heading into H2 due to the unexpectedly high inflation. Traders are fully pricing in a "hold" at the 30th of July FOMC meeting, according to the CME FedWatch Tool.
In summary, the combination of tariff easing creates a more supportive medium-term backdrop for Bitcoin, while the Fed's cautious rate hold keeps investors vigilant, resulting in price fluctuations within these key liquidity zones. The overall outlook suggests Bitcoin could sustain gains if it breaks above resistance, but downside risk remains if macroeconomic headwinds return.
| Factor | Impact on Bitcoin Price | |------------------------------|------------------------------------------------| | Tariff relief (U.S.-China & U.S.-Japan) | Positive: Liquidity boost, fiscal easing, reduced uncertainty support price gains around $112K–$123K | | Fed policy decision (expected rate hold) | Mixed: Market priced in hold; minor short-term dip due to derisking; medium-term uncertainty remains | | Technical levels | Critical support at $112K-$115K; resistance at $123K with potential short squeeze if breached | | Market sentiment | Cautious optimism with profit-taking likely after July rally above $123K |
- In the context of recent tariff relief and a more favorable market environment, technology, specifically cryptocurrency such as bitcoin (BTC) and Bitcoin, has seen a significant surge, marked by consecutive green monthlies and a rise in investor confidence.
- The tech sector, including finance and investing, is closely monitoring the Federal Reserve's policy, particularly its impact on interest rates. For instance, the recent Fed decision to maintain rates led to a minor downward price adjustment in bitcoin, signifying the market's sensitivity to monetary policy.
- As Bitcoin navigates critical liquidity zones, its price movements are influenced by both technical factors (like strong support at around $112,000–$115,000 and resistance at $123,000) and macroeconomic events (such as cautious Fed decisions or inflation concerns), creating an environment of uncertainty for Bitcoin's next move.
