Bitcoin Tests $66,900 Resistance as Middle East Risks Linger Despite Softer US Inflation

Bitcoin has struggled to establish a clear direction even after rebounding, as easing concerns over additional US rate hikes have been offset by persistent Middle East tensions. In the near term, traders are focused on whether the token can break above $66,900. If it fails to do so, it may remain stuck in a range.

As of 6:17 p.m. on July 16, Bitcoin traded at $64,138 on Binance's USDT market, down about 0.93% from a day earlier. On Upbit, it changed hands at about 94.32 million won. The kimchi premium, which tracks the gap between prices on domestic and overseas exchanges, was minus 1.19%.

Trump Says He Has No Deadline for Striking Iran as Middle East Risks Persist Despite Softer Inflation

US inflation data have recently come in below forecasts, easing some expectations for further rate hikes and lifting cryptocurrencies and US stocks. Tensions between Washington and Tehran, however, continue to keep markets alert to the risk of another rise in oil prices and renewed inflation pressure.

On July 15, President Donald Trump said he does not like setting deadlines when asked whether he had given Iran a timetable for a strike. The comment marked a retreat from his tougher remarks on July 14, when he said he would attack power plants and bridges if a ceasefire agreement with Iran was not reached by next week.

Middle East tensions, however, have not eased. US forces have reportedly struck Iranian missile facilities for five consecutive days. Separate reports said Washington is also reviewing broader airstrikes on Iran and even the possibility of deploying ground troops.

US producer prices for June, released a day earlier, fell 0.3% from the prior month, undershooting market expectations. After consumer prices also came in below forecasts, concerns over further rate hikes have moderated. The producer price index is viewed as a leading inflation gauge because it tends to feed through to consumer prices with a lag.

The Federal Reserve has remained cautious despite softer inflation. The Beige Book, the central bank's survey of regional economic conditions released that day, said the US economy expanded at a modest pace overall in recent weeks. It also noted that some businesses cited the Middle East conflict and tariffs as drivers of higher costs. According to CME FedWatch, the probability of a July rate hike fell to 10.2% from 41% three days earlier.

Bitcoin Rebound on Inflation Data Draws Caution as Spot Buying and ETF Flows Stay Mixed

Against that backdrop, spot Bitcoin exchange-traded funds recorded net inflows of $197.4 million last week. Weekly flows showed buying had returned, but daily data remained mixed, with net inflows and net outflows alternating.

Bitfinex said in a recent weekly report that the rebound driven by the inflation data should be interpreted cautiously. Softer US CPI pushed the implied probability of a July rate hike down from 42% to the low teens, while lower Treasury yields helped reprice Bitcoin alongside other risk assets. Even so, the exchange said the Coinbase premium remained negative and demand for downside hedging stood out in the options market.

Without confirmation of sustained ETF buying, a rally driven by a single data point is vulnerable to a pullback, Bitfinex wrote. It added that if Brent crude rises above $90, expectations for higher rates could flare up again and weaken the case for further gains. Brent was trading at $84.61 on TradingView on July 16.

Glassnode also said Bitcoin may be building a floor, though spot demand remains insufficient. In its weekly report, the on-chain analytics firm said selling pressure from long-term holders has slowed from its peak and profit-taking has also moderated. But ETF inflows remain weak, follow-through spot buying after derivatives liquidations has been limited, and volatility is still compressed. The firm added that Bitcoin has recently traded less like an asset tracking equities and more like one that strengthens when the dollar weakens.

That pattern is visible in the data. Over the past 50 trading days, Bitcoin's correlation coefficient with the dollar index, or DXY, stood at minus 0.79, indicating a strong inverse relationship.

Interest in the crypto market has meanwhile fallen to its lowest level since October last year. Santiment said mentions of crypto assets across major social channels including X had dropped to their lowest level since October last year. The firm added that such indifference can appear bearish on the surface, but periods of weaker retail participation can make it easier for large buyers to move the market. It also said strong rebounds have formed in the past during stretches of market fatigue and fading interest.

Can Bitcoin Clear $68,000? A Break Below $61,300 Could Restart the Downtrend

Experts say Bitcoin needs to reclaim the $66,900 to $68,000 zone for expectations of a trend reversal to strengthen. If it fails to hold $61,300, another test of the $58,000 range could come back into play.

Bitcoin was searching for direction near $63,800. Julian Pineda, a market analyst at Forex.com, said the token was testing an area around $63,800 where support overlaps with the lower boundary of a long-term downtrend line. In his view, that could leave the market in short-term sideways trading and wait-and-see mode.

If buying interest holds and Bitcoin breaks above $66,900, the downtrend line would give way and buyers could gain the upper hand, he added.

Pineda also said that if Bitcoin falls below $57,790, a recent low and an area near this year's bottom, sellers could regain control. In the short term, he added, the market remains at a point where direction still needs to be confirmed.

Alex Kuptsikevich, chief market analyst at FxPro, said the total crypto market capitalization rose 3.5% after the softer US inflation data to $2.22 trillion, the highest in about three weeks. Bitcoin is also attempting to break a downtrend that has been in place since early last month near the $65,000 level, he said. While a trend reversal has not yet been confirmed, the next major medium-term resistance could come at $73,000 to $74,000 if geopolitical headwinds do not flare up again.

Bitfinex identified $61,300 as a key threshold separating recovery from renewed downside risk. A move above $68,000 followed by consolidation at that level would confirm a recovery pattern, it said. But if Bitcoin is rejected in that area, the market could enter another medium-term bearish retest.

Two daily closes below $61,300 would weaken the recovery case, according to Bitfinex. In that scenario, downside could reopen toward $58,532 and then $52,903.

Kang Min-seung, Bloomingbit reporter minriver@bloomingbit.io