Bitcoin Traders Enter Fed Week With Minimal Downside Protection
Bitcoin's price has been stuck around $65,000 for most of July, and analysts at Bitfinex say traders have entered this week's Federal Reserve meeting with almost no protection against a potential downturn. The firm's analysts note that the 30-day put skew fell from 6.5 volatility points on July 14 to 2.2 on July 23, giving the market its lowest downside protection since June.
Bitfinex analysts believe there will be a supply wall at $68,000, where prices of 3.55 million BTC bought in the last six to twelve months cluster. This is also the level where underwater holders usually sell into strength, which could cap any potential rally.
The Federal Reserve is set to announce its interest rate decision on Wednesday, July 29, with markets expecting a 33.7% chance of a hike and a 66.3% chance of a hold, according to the CME Group's FedWatch tool. Higher rates are bad for Bitcoin as they provide investors a safe return for holding money elsewhere, making it difficult for risk assets to attract capital.