Reaching $68,000 Rests On Whether Buyers Return

Today’s Fed decision on rates will likely set Bitcoin’s near-term trajectory, but the real signal will show in the trading sessions that follow. Flow data will reveal if ETF demand will return post-FOMC and allow the price to break the range.

Bitcoin enters today’s Federal Reserve decision capped by the same $68,000 ceiling that has held all month. The cause is a combination of macro catalysts and a shortage of buyers, with demand stepping back before the latest price pullback 

Recent de-risking before the Federal Open Market Committee (FOMC) meeting has been orderly but persistent. Four red daily closes ran into the weekend, followed by a two-day slide on Monday and Tuesday that printed $62,730 before price recovered the range lows. 

The move towards the $68,000-68,500 band stalled due to two forces: short-term holders exiting as price approached their breakeven and shifting macro conditions. Post-FOMC price action will set the near-term path for risk assets.

The case for a hawkish surprise weakened on Monday, as Brent crude fell 5.2 percent, and BTC still fell. When Brent recovered, BTC did so too, implying that the asset is not only moving due to interest rate sensitivities.

We believe this market behaviour points to weak underlying demand as the main near-term constraint on BTC rather than just macro-dependent flows. BTC ETFs have now posted four consecutive red sessions, and Strategy has spent a fifth week raising cash rather than buying bitcoin. Other bitcoin treasury companies have also made no notable purchases since mid-June. 

The Summer Slumber Continues

Despite BTC rising through July, the narrow consolidation range has held, and bitcoin is still trading within the boundaries of short-term support and the overhead $68,000-68,500 resistance band.

Indeed, the month is on track to record  the lowest average daily bitcoin spot volume since November 2023, at $4.5 billion for the month, while Chicago Mercantile Exchange (CME) open interest (OI) remains at multi-year lows.

Spot Buying Has Slowed

The demand side for BTC withdrew even before prices pulled back. Between 23 and 28 July, US spot bitcoin ETFs recorded four consecutive red sessions totaling $526.5 million in net outflows. The first session this week extended the streak, a reminder of how transitory ETF flows have proved. 

Inflows have tapered but outflows have been modest causing BTC to hold up well while tech sold off. The recent weakness points to de-risking into the rate decision, rather than a broader withdrawal. 

Strategy has gone five weeks without purchasing bitcoin — reinforcing this view.  The company instead shifted its capital approach, raising $544.5 million through share sales, $525 million of that was allocated to bolster their USD cash reserves to a total of $3.75 billion. Under the assumption that there are no further STRC raises, and the status quo is maintained, Strategy can now  fund dividend payments for the next 32 months if BTC price were to remain stable. 

The company also spent $25 million repurchasing discounted preferred shares. Presumably because retiring this high-yield paper at a discount is a more efficient use of capital than adding to its bitcoin holdings, currently held at an average cost of $75,476. Until these preferred shares reclaim their par value, with the STRC product returning to its $100 par, this structural bid for BTC from any of the Strategy vehicles remains on the sidelines.

Ether Retains Relative Strength

Ether, on the other hand, has outperformed bitcoin through the de-risking window. ETH/USD closed Tuesday at $1,922, down 0.6 percent over the timeframe in which bitcoin fell 3.3 percent, and the ETH/BTC ratio is now up nearly 20 percent from its June lows, trading at a six-week high. The Sunday 26 July session made the point directly, with Ether rallying 4.2 percent to $1,956 while BTC managed 1.6 percent.

Spot Ether ETFs took in a net $54.53 million from 22 to 28 July, with net inflows in three of the past four sessions, in contrast with bitcoin ETF outflows. 

ETH is also outperforming other major altcoins, with the SOL/ETH ratio down 23.2 percent for the month, eight percent away from 900-day lows. If the post-FOMC flow resumption favours Ether ETFs again, the rotation view gains support; if bitcoin ETFs lead, July’s Ether outperformance may prove temporary, rather than genuine preference.

Key Levels At A Glance