On July 28, Bitcoin fell back to $63,500. After the overnight U.S. stock market close, NVIDIA shares were down about 4.8%, dragging down AI-related stocks. This week is packed with key events: the FOMC rate decision by the FED on Wednesday; the core PCE inflation report and second-quarter GDP data on Thursday; and earnings from Microsoft, Meta, Apple, and Amazon. On Friday, Bitcoin and Ethereum options worth about $13 billion to $14 billion are set to expire.
Market Focus on the FED’s July 29 Decision
(Source: Polymarket)
Key events this week are as follows:
July 29 (Wednesday): FED FOMC rate decision; in the derivatives market and on Polymarket, traders are leaning to keep the 3.50%-3.75% range unchanged; traders are more focused on the tone of FED Chair Kevin Warsh’s press conference and any hints about the future direction of rate hikes or cuts
July 31 (Thursday): core Personal Consumption Expenditures (PCE) inflation report and second-quarter GDP data
This week’s earnings: Microsoft, Meta, Apple, Amazon
Friday: Bitcoin and Ethereum options worth about $13 billion to $14 billion expiring
In the past week, nearly 9,000 BTC have already flowed out of exchanges; however, Bitcoin futures open interest fell while prices inched up, Sondergaard noted. Order book data also showed ongoing net sell pressure, indicating traders are reducing positions rather than adding to long exposure.
AI Stock Bubble and Inflation Risk
Minutes from the FED’s June meeting warned that years of inflation staying above the target “may begin to affect inflation expectations and wage and price-setting decisions.” May CPI rose 4.2% year over year (the largest increase since April 2023), and June eased to 3.5%, still well above the 2% target. If inflation expectations run out of control and a wage-price spiral forms, the cost will be extremely high. The lesson from the 1970s shows that then-FED Chair Volcker ultimately had to push rates to nearly 20%, bringing the unemployment rate to 10.8% in 1982.
The S&P 500 faces a double risk: prematurely easing policy could raise inflation expectations, forcing larger rate hikes later. Tightening again now would increase corporate financing costs, hitting overvalued AI stocks and data center financing that relies on low interest rates first.
FAQ
What price level does Bitcoin currently need to break to end the consolidation?
Joel Kruger, a market strategist at LMAX Group, said Bitcoin needs to break $67,300 to break the weekslong consolidation it has been in since June; Ether (ETH) faces a similar test near $2,000. A break above these levels could signal the next leg of the uptrend.
What is Nansen analyst’s view on Bitcoin’s recent move?
Nicolai Sondergaard, a senior research analyst at Nansen, said his baseline forecast is that Bitcoin’s price will drop to a range of $52,000 to $58,000. He said the recent rebound lacks strong buyers and is more a position adjustment than the start of a broad-based upward trend. Improvement factors include more stablecoin inflows to exchanges, ongoing spot ETF buying, and signs that long-term holders are stopping loss-taking sales.
How important is the FED’s July 29 decision for Bitcoin?
Analysts said expectations for rates to stay unchanged have largely been priced in by the market. More importantly are the tone of FED Chair Kevin Warsh’s press conference and any hints about the future direction of rate hikes or cuts. Combined with core PCE data and earnings from major tech companies in the same week, this week’s macro developments may determine whether Bitcoin can break out of a multi-month trading range.
