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Prominent analysts predict that the upcoming week could be critical for the crypto market, with the Federal Reserve’s interest rate decision potentially impacting Bitcoin’s price. Recently, Bitcoin experienced significant volatility, dropping below the important $30K and $31K marks, even touching a critical support level at $29.5K. These sparked fears of a major collapse. As the Fed’s interest rate decision and a substantial options contract expiry approach, the market is anxiously waiting to see if these events will disrupt the current consolidation.
The Federal Reserve’s decision on interest rates is a key event that investors across all asset classes watch closely. The decision can influence the value of the dollar, which in turn can impact the price of Bitcoin. If the Federal Reserve decides to increase interest rates, this could strengthen the dollar, potentially leading to a decrease in the price of Bitcoin as investors move towards the strengthened dollar.
According to CME Group, financial experts predict a 92% likelihood that the central bank will raise the interest rate by a quarter of a percentage point on July 26. If the Federal Open Market Committee (FOMC) meets these expectations, it would elevate the federal fund’s target range to between 5.25% and 5.5%, a level not seen in almost 22 years.
On the other hand, Bitcoin’s option expiry on July 28th has a maximum pain point at $29K. The total open interest for call options stands at 45,083, with the highest bets placed on a rise towards $30K and $31K, representing a notional value of $300 million. The put-to-call ratio is 0.55, and the total notional value is approximately $2 billion.
If Bitcoin’s price doesn’t exceed $30K by July 28th, it could trigger strong bearish pressure, possibly driving the asset’s value below $29K.
Bitcoin has consistently remained below the $30K mark, indicating a lack of strong buying interest at the current price levels. As of writing, BTC price trades at $29,985, declining over 0.7% in the last 24 hours.
Despite a bullish push toward $30,100, the long wick on the candlestick suggests sell-offs at higher prices. The bears will likely aim to consolidate their hold by driving the price below the critical $29,500 support level.
If they manage to do so, it would suggest a bearish sentiment to the ongoing consolidation. The BTC price could then potentially drop to the robust support at $27,200.
On the other hand, if the price sharply rebounds from $29.5K and breaks above the $30,500-$30,800 range, it could signal a potential rise to $31,000. A break and close above $32,500 could bring a new uptrend.