The Federal Reserve left its benchmark rate unchanged at 3.50% to 3.75% at its July meeting, matching expectations. Minutes said activity has been expanding at a solid pace despite elevated uncertainty, while job gains have “kept pace with the workforce”. The decision passed 9-3, with the Cleveland, Minneapolis and Dallas Fed Presidents dissenting in favour of a 25-basis-point rise. Crypto prices initially firmed; Bitcoin (BTC) briefly moved above $64,000 after the announcement before easing back, and it was last at $63,900, down 0.2% over 24 hours.
Glassnode said BTC has lagged a US dollar rally that began in May, and ranks among the weakest showings versus the USD at a comparable point in the 20 dollar rallies tracked since 2015, with only three worse. The firm linked the pressure to rates, with the 30-year Treasury yield above 5.20%, and to the three-month Bitcoin futures basis staying below the two-year US Treasury yield since February; it called this only the second such extended negative spread, after August 2022 to January 2023. Glassnode put Bitcoin’s largest cost-basis cluster at $62,000 to $68,000, flagged short-term holder cost basis near $69,000, and cited a long-term holder supply wall at $83,000 to $86,000, while noting price remains close to the 200-day moving average.
Bond Yields and Derivative Market Liquidity
With the Federal Reserve holding interest rates steady at 3.50% to 3.75% and the 30-year Treasury yield rising above 5.20%, traditional bonds are highly attractive. We believe derivative traders should expect thinner market liquidity in the coming weeks as institutional desks have little reason to supply leverage. Since the three-month Bitcoin futures basis yield remains below the two-year Treasury yield, the classic cash-and-carry trade is currently dead.
Looking back at historical data, a similar negative basis spread occurred between August 2022 and January 2023, which ultimately marked the bottom of the last major market cycle. With global crypto derivative daily volumes down compared to the highs of early 2024, institutional participation is clearly sitting on the sidelines. We suggest that traders avoid heavy leverage and instead utilize premium-harvesting options strategies to exploit this low-volatility environment.
Trading Clusters, Resistance Levels, and Market Outlook
Bitcoin is currently trapped in its densest trading cluster between $62,000 and $68,000, meaning a massive amount of supply is waiting to break even. We must pay close attention to the $69,000 overhead resistance, where underwater short-term traders are likely to sell off their positions to limit losses. A failure to clear this barrier could trigger a slow drift back toward the bottom of the current range near $62,000.
Because this market correction has been relatively shallow compared to prior cycles, it will likely take longer to play out before we see a sustained upward trend. We recommend keeping a defensive posture and focusing on short-term tactical trades rather than calling an early macro bottom. Patience will be the most profitable tool in our arsenal over the coming weeks.
