Why Did Bitcoin Price Fall Today? Decline Led by Fed Uncertainty and ETF Outflows

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Ahead of the U.S. Federal Reserve's (Fed) monetary policy announcement, increased interest rate uncertainty compounded by geopolitical tensions emanating from the Middle East led to a short-term decline in Bitcoin (BTC). Amid psychological anxiety spreading across risk assets, Bitcoin showed synchronization with the stock market, putting its short-term support level to the test. Experts interpret that despite macroeconomic headwinds, the overheating in the derivatives market is cooling down, suggesting that the decline is limited to a range-bound movement.

According to CoinMarketCap, a cryptocurrency market data aggregator, as of July 29 (local time), Bitcoin traded down 0.71% over 24 hours at $63,403.86 (approximately 87.6 million KRW), mirroring a 1% decline in the total cryptocurrency market capitalization. Bitcoin showed a high correlation of 76% with the Standard & Poor's (S&P) 500 index, reacting to interest-rate-sensitive macroeconomic variables. Geopolitical instability in the Middle East due to Iran's missile attack caused oil prices to surge, and monetary policy uncertainty, including a 38% possibility of an interest rate hike under Fed Chairman Kevin Warsh, were cited as major factors dampening investor sentiment. Although the Fed ultimately decided to keep interest rates unchanged, market caution that persisted until just before the announcement stimulated selling pressure.

Institutional fund outflows and large-scale selling also put downward pressure on prices. According to SoSoValue data, Bitcoin spot ETFs experienced a net outflow of $49.8 million (approximately 6.88 million KRW) on July 29. Furthermore, news that BlackRock clients sold $54.8 million (approximately 75.7 billion KRW) worth of Bitcoin added further downward pressure. However, in the derivatives market, the volume of forced liquidations decreased by 81.92% compared to 24 hours prior, totaling only $28.03 million (approximately 38.7 billion KRW), indicating that the previous process of unwinding excessive leverage is gradually nearing completion.

From a technical analysis perspective, Bitcoin is currently consolidating between the Fibonacci support level of $63,410 (approximately 87.6 million KRW) and the upper resistance level of $64,900 (approximately 89.6 million KRW). Experts diagnose that the market has entered a phase where it is interpreting the Fed's interest rate freeze decision and Chairman Warsh's remarks from various angles. If buying pressure successfully defends the short-term support zone between $63,000 and $63,500 (approximately 87 million KRW to 87.7 million KRW), there is a high probability that it will attempt a rebound to reclaim $64,900.

Conversely, if the daily closing price falls below $63,000 (approximately 87 million KRW), further tests of key moving averages will be inevitable. In this scenario, it would break below the 50-day Simple Moving Average (SMA) located at $63,570 (approximately 87.8 million KRW), and in a severe case, there is a risk of it being pushed down to the lower support level around $61,250 (approximately 84.6 million KRW). For short-term momentum to shift upwards, returning the price above the 7-day Exponential Moving Average (EMA) of $64,433 (approximately 89 million KRW) is considered a key task.

Ultimately, Bitcoin's direction hinges on whether institutional funds re-enter Bitcoin spot ETFs following the Fed's decision to hold rates. Market experts anticipate that rather than a sharp decline, a neutral to slightly bearish trend, digesting macroeconomic variables, will continue for the time being. As anxiety over interest rate hikes has subsided for now, attention is focused on whether Bitcoin can regain upward momentum and attempt to settle in the $64,000 range if ETF inflows show a rebound in the future.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*