Bitcoin muted as markets fret over Fed, crypto bill

Bitcoin remains range-bound as investors await key policy catalysts

There are two main drivers for crypto this week, keeping Bitcoin trapped within its $58,000-$65,000 summer consolidation range.

The cautious tone is being set by the Fed's policy decision scheduled later on Wednesday, a key catalyst for risk assets. While rates are widely expected to remain unchanged, investors will be closely watching for any signals pointing to tighter monetary policy through future rate hikes, which could weigh further on digital asset prices.

Bitcoin already came under pressure this week, slipping towards the $63,000 level as rising oil prices and renewed inflation concerns following the latest escalation in the Middle East fuelled expectations of a more hawkish Fed. The subsequent fragile pause did little to calm nerves, triggering a pullback across cryptocurrencies before some of those losses were pared.

Trump made more crypto income than Coinbase – Bill odds dim

Beyond the Fed, investors are also watching the increasingly uncertain path of the US Clarity Act, which would establish a regulatory framework for digital assets, with the Senate increasingly unlikely to vote on the bill before the August recess.

While the legislation has been a major source of optimism for the industry, its progress has slowed amid a debate over ethics provisions linked to President Donald Trump's and his family's extensive crypto interests, reducing confidence that the bill will advance on the timetable many had hoped for.

Notably, the 'crypto president' has become an unexpected hurdle to the very industry he has championed. Trump reportedly generated at least $1.4 billion in crypto-related income last year, surpassing the earnings of any publicly listed US digital-asset company, including Coinbase, the largest US crypto exchange, which reported $1.2 billion.

ETF inflow streak ends, conviction stays weak

Further adding to the cautious mood, demand for US-listed Bitcoin ETFs remains subdued, underscoring the fragility of the cryptocurrency's recent recovery. While the funds attracted modest inflows earlier in July, more than $526 million exited spot Bitcoin ETFs during the final four trading sessions, snapping a seven-session inflow streak, the longest such streak since April.

While much of the weakness appears linked to mounting expectations of a more hawkish Fed and the increasingly uncertain outlook for the Clarity Act, both of which continue to weigh on investor sentiment, the bigger picture remains somewhat more constructive.

ETF flows have stabilised compared with the heavy withdrawals seen in June. Against the backdrop of a broader crypto downturn, that moderation in selling pressure could suggest a base is gradually taking shape, even if investors remain reluctant to materially increase exposure before greater macroeconomic and regulatory clarity emerges.

Some positive sentiment: Price holds upper range, up for July, avoids chip rout

Further supporting that view, Bitcoin is set to snap a two-month losing streak. After ending June more than 20% lower, the largest cryptocurrency is on track to finish July up nearly 10%.

While macro concerns over AI-related credit risks have weighed on risk assets broadly, pushing Wall Street lower, Bitcoin has weathered the ongoing deleveraging in AI and semiconductor stocks, in comparison, relatively well. Price action has remained stable within the upper end of its consolidation range, showing signs of resilience rather than mirroring the risk-asset slump it has traditionally tracked.

Bitcoin back at the 200-week average: Make or break?

Bitcoin has posted modest gains over the past month amid hopes it has found a floor near $58,000 after falling roughly 50% from its October peak above $126,000. Price action is attempting to stabilise around its key 200-week moving average, a level that has supported price action in recent sessions.

Technically, the RSI continues to suggest consolidation rather than a reversal. Key levels to watch are support at $62,000 and $60,000 on the downside, while a break above $65,000 would improve sentiment and increase the chances of a sustained escape from the current trading range.