Bitcoin Trapped in Range Amid Fed and Trump Uncertainties - Will It Break Through or Collapse? [Investing.com]

By Damian Nowiszewski

Bitcoin Continues Price Correction Phase

Hawkish Fed and Tariff Concerns Weigh on Cryptocurrency

Bitcoin ETF Fund Inflows Also Slowing

Bitcoin has shown strong upward momentum in 2024, continuing its rebound since late 2022 and maintaining a rally over the past few months. Several key factors have driven demand, including the halving, the launch of Bitcoin ETFs, and the potential election of Donald Trump, who publicly supports digital currency. Riding this momentum, Bitcoin approached its all-time high of $110,000 per coin.

However, a correction phase has persisted over the past three months. With the Federal Reserve maintaining its hawkish stance, there remains potential for further decline. In the medium to long term, this could present an opportunity to re-enter at better price levels.

Tariffs and Fed Policy Pressure Bitcoin

News of new U.S. tariffs is weighing on Bitcoin prices, creating an environment where buying pressure struggles to drive additional gains. Simultaneously, the Federal Reserve remains a key variable. Following Donald Trump's potential election, the Fed's policy stance has shifted, with markets now expecting the first rate cut in September.

Meanwhile, Texas is advancing legislation to hold Bitcoin as part of its strategic reserve assets. The bill would also remove the current $500 million annual institutional investment limit, potentially generating significant demand. If passed, this could influence policy changes at both state and federal levels.

The recent slowdown in Bitcoin's rally is also evident in fund flows. Last week, Bitcoin ETFs saw outflows of $415 million, breaking several weeks of consecutive net inflows. Over the past five months, Bitcoin ETFs have attracted approximately $29.4 billion, driving price increases. However, strong fund inflows will likely be needed again to break through $110,000.

Technical Analysis: Bitcoin Approaches Key Support Within Correction Range

Since November, Bitcoin has moved within a range with key support formed at $90,000-$92,000. Recent price action suggests this support level may be tested again. However, a clear downward breakthrough would require strong selling pressure.

Figure 1: Bitcoin Technical Analysis

If selling pressure breaks through this zone, the next technical target would be around $74,000. However, this bearish scenario would likely only materialize if additional market headwinds intensify.

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