Bitcoin's Rebound May be a Bull Trap as Technical Trends Point to Further Decline

Bitcoin's recent rebound to $66,921 has raised concerns that it may be closer to a bull trap than a trend reversal. Despite its attempt to bounce back, the cryptocurrency slipped into the $63,000 range, sparking fears of another drop.

The broader crypto market also weakened, with Bitcoin falling 2.7 percent to around $63,400. Ether dropped 4.2 percent to $1,875 and Solana fell 4.4 percent to $73.

Market participants are cutting leverage exposure ahead of the Federal Open Market Committee meeting, where Fed Chair Kevin Warsh is scheduled to hold a news conference on July 29. The dominant view is that the Federal Reserve will hold the policy rate at 3.50 to 3.75 percent, but a dovish stance from Warsh could lead to a short squeeze.

Technical trends and indicators are also pointing to a possible drop, with Bitcoin trading below its 200-day exponential moving average for months. The relative strength index stood at 46.5, staying below 50, and the squeeze momentum indicator has been active for 9 consecutive candles.