Bitcoin falls towards 106K amid risk-off trade, could institutional and corporate demand aid a recovery?

Bitcoin is edging lower after failing to maintain yesterday’s rally to 108.9k. The largest cryptocurrency trades -0.7% at 106.2k at the time of writing, squarely within a trading range seen through most of June. While strong institutions and corporate demand offer support, the conflict in the Middle East keeps the mood fragile, and investors look cautiously ahead to the FOMC rate decision tomorrow. 

The Iran-Israel conflict has extended into a fifth straight day and shows few actual signs of de-escalation. Trump calling for the immediate evacuation of Tehran ramped up concerns that the US could directly involve itself in the war, although the White House clarified that that is not the case. 

Escalating geopolitical tensions have little direct impact on the crypto market. However, they affect risk sentiment, which drives near-term moves in cryptocurrency. Other risk assets, such as US equities, are also in the red.  

Institutional demand remains strong 

Despite ongoing geopolitical tensions, institutional demand for Bitcoin remains strong. Spot BTC recorded a sixth straight day of net inflows on Monday, totaling $1.8 billion since last Monday. Persistent BTC ETF demand could help Bitcoin’s price rise back up towards its record high. 

News that Trump Media & Technology Group is seeking approval from the Securities and Exchange Commission to launch ETFs that will invest in both Bitcoin and Ether adds to the supportive narrative for the tokens. The filing marks Trump Media's second major ETF application over the past fortnight, after it applied for a spot ETF at the start of the month. 

Corporate demand ramps up 

In addition to institutional demand, corporate demand for Bitcoin continues to rise. Strategy purchased a further $1.05 billion of Bitcoin, as reported in a SEC filing yesterday. Meanwhile, Metaplanet’s BTC holding reached 10,000. Corporate holdings of Bitcoin are growing at a fast clip. According to data from BitcoinTreasuries.net, the number of entities holding Bitcoin has risen by 27 over the past 30 days, to 235, 130 of which are public companies. Rising corporate demand is supportive of the BTC price, adding to its legitimacy while boosting demand. 

FOMC rate decision 

The Federal Reserve's two-day meeting kicks off today, and the FOMC interest rate decision is due tomorrow. The Fed is expected to leave interest rates unchanged at 4.25% to 4.5%. The central bank will release updated growth and inflation projections along with its dot plot, which provides a path of where interest rates could go over the coming months. In the press conference, Federal Reserve chair Jerome Powell could adopt a slightly more dovish stance in light of cooler-than-expected inflation data and signs of a weakening jobs market.  

Heading into the meeting, the market expects two 25 basis point cuts between now and the end of the year. Any sense of a more dovish Fed could give Bitcoin a boost. The cryptocurrency often performs better in a low-interest rate environment. However, given the Middle East conflict and the upcoming July 9 deadline for unilateral tariffs, the market will likely remain cautious, which could limit the upside in BTC for now. 

Bitcoin technical analysis 

BTC has fallen from its record high of 111.9k with a series of higher lows. Yesterday, BTC rose to 108.9, with a long upper wick suggesting buying demand was weaker at that level. The upward-rising 50 SMA has supported the downside. The RSI is neutral at 50, giving away few clues. 

Buyers would need to rise above 108.9k and 110k to extend gains to 111.9k and fresh record highs.  

On the downside, sellers must break below the 50 SMA at 104k. A break below here opens the door to 100k, the psychological level, and the June low. Should sellers take out this level, they could gain traction towards the 200 SMA at 95.8k. 

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