Reaching $68,000 Rests On Whether Buyers Return

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 price did. The rate call will move the market, but the flow data in the sessions that follow will decide whether the range finally breaks higher.

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

The case for a hawkish surprise lost its focal point 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 moving on just interest rate sensitivities.

We believe this market behaviour points to a near-term constraint on BTC rooted in the absence of buyers 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.

Today’s Fed decision on rates will move the price, but more important information arrives in the sessions that follow, when flow data reveals whether ETF demand will return, once the FOMC decision is out.

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 $68-68,500 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 23-28 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.

While this clearly demonstrates a drying-up of inflows, the modest scale of the outflows, alongside BTC holding up relatively well, points to a temporary de-risking into the rate decision, rather than a broader withdrawal. Monday and Tuesday’s outflows were modest, which suggest investors are pausing ahead of the Fed meeting rather than accelerating redemptions. The post-FOMC data will be the real test of whether this bid returns.

Strategy has also reinforced this view, with a fifth week now without any bitcoin purchase. 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 reserve, now up to a total of $3.75 billion. Under the assumption that there are no further STRC raises, and the status quo is maintained this reserve is now enough to 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. Management currently treats retiring this high-yield paper at a discount as 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 also took in a net $54.53 million from 22 to 28 July, and three out of the last four trading sessions has been positive for Ether ETFs, in contrast with bitcoin ETFs, so the relative bid holds on the institutional side as well.

ETH is also outperforming other major altcoins, with the SOL/ETH ratio down 23.2 percent for the month, 8 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 will read as defensive positioning, rather than genuine preference.

Key Levels At A Glance

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