Key points:
- Bitcoin’s price compression and the Bollinger Bands suggest a range expansion will occur soon.
- This week’s early price weakness is likely the result of traders cutting risk ahead of Wednesday’s FOMC and a White House update on its crypto policy and Bitcoin strategic reserve.
Bitcoin (BTC) continued to trade within the $117,000 to $120,000 range on Tuesday, and it looks poised for a daily close below $118,000. Some analysts have called for BTC to retest underlying support at $114,000 to $110,000, and while technicals do support such a move, Wednesday’s FOMC minutes and a long-awaited White House report on US crypto policy and a strategic Bitcoin reserve could reverse the downtrend.
The report should reveal the exact number of Bitcoin currently held by the US government, and traders are hopeful that President Trump will take further steps toward enacting an official strategic Bitcoin reserve.
In addition to comments from the Fed, quarterly earnings for Meta Platforms, Ford, Robinhood and Microsoft are posted on Wednesday, along with US economic data on Nonfarm Payroll, the Purchasing Managers’ Index (PMI), GDP, consumer sentiment, and the ISM report on manufacturing and services.
Federal Reserve Chair Jerome Powell is also scheduled to speak, following the Fed’s decision on interest rates. Currently, CME Group’s FedWatch metric shows Fed funds futures pricing in a 98% chance that the central bank will leave rates unchanged within the 4.25% to 4.5% range. Despite intensifying pressure from President Trump to immediately cut rates, Powell appears committed to staying the course and leaving the Fed with the option of hiking or cutting rates based on economic data.
As has been the case in previous trading days before the FOMC, crypto traders appear to have cut risk, and most large-cap tokens sold off today. Data from TRDR shows Bitcoin’s aggregate open interest falling to $49.58 billion, from $50.58 billion at the Wall Street opening bell. Long liquidations in the futures market accelerated the selling, and data from Coinglass shows $173.8 million in longs magin called over the past 12 hours.
12-hour total market liquidations. Source: CoinGlass
Will good news trigger a breakout?
In the past three weeks, Bitcoin price has seen a near 45% reduction in intraday volatility as its daily high to low range has narrowed to $2,300 from $4,200 on July 14. This price compression, although typical for periods of consolidation, tends to terminate with a strong directional move, and in this case, FOMC minutes that align with the markets’ expectation and perhaps bullish news from the White House crypto report could be the catalyst for upside.
The Bollinger Bands are also near pinched to a close, reinforcing Bitcoin’s price compression and brewing range expansion.
BTC/USDT Binance Perps. 1-day chart. Source: TRDR.io
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
