Bitcoin maintained a stable position around $66,300 on Tuesday morning, following a brief rally over the weekend triggered by prospects of an impending deal concerning Iran. While the potential reopening of the Strait of Hormuz and an end to ongoing conflicts could remove significant macroeconomic pressures and support risk assets, analysts caution that this relief may not be sufficient to sustain a meaningful rally for Bitcoin.
Timothy Misir, head of research at Blockhead Research Network, highlighted that the market currently finds itself in a predicament between deteriorating trading volumes and macroeconomic improvements. As of June, Bitcoin has experienced a notable decline of 9.8%, marking its worst June performance since 2022, according to data from CoinGlass.
Misir noted that although Bitcoin may have received a temporary boost, institutional demand remains tepid. Since the onset of the war, Bitcoin exchange-traded funds (ETFs) have played an important role in supporting the cryptocurrency’s price. However, they have faced significant outflows totaling $2.1 billion in June, placing them on pace to exceed the $2.4 billion that withdrew in May. While there were slight inflows recorded on Monday, the trend shifted back to outflows shortly thereafter.
Trader Jasper De Maere from Wintermute remarked that while the last Bitcoin market cycle experienced gains following ETF approvals in early 2024, the current scenario raises questions about the source of capital for a potential rally to $100,000. With institutions currently sidelined and retail traders focused on leveraged ETFs and equities, the outlook remains uncertain.
Bitfinex analysts also pointed out that recent price movements have been driven more by seller exhaustion than by authentic demand. They indicated that Bitcoin remains at a crossroads, situated between a critical cycle floor around $54,000 and resistance from short-term holders, who impose a ceiling near $68,000.
Looking ahead, the upcoming Federal Reserve Open Market Committee (FOMC) meeting, led by Chair Kevin Warsh, could further influence Bitcoin’s trajectory. Current predictions show a 99.6% likelihood of maintaining the current interest rates, but market participants are particularly interested in the tone Warsh adopts during the subsequent press conference.
Lacie Zhang, a research analyst at Bitget Wallet, expressed that if the Federal Reserve opts for a dovish pause, Bitcoin could see a rebound, possibly retesting the $68,000 to $70,000 range. Conversely, a hawkish stance might lead prices to revisit levels between $62,000 and $63,000. She maintained that while lower energy costs and persistent institutional demand present a favorable long-term setup for Bitcoin, the confirmation of its trajectory remains contingent upon factors such as yield rates, the strength of the dollar, and consistent ETF inflows.
