Bitcoin Price Squeeze After Fed Decision: 2.72 Million BTC Sounding the Alarm
Although the U.S. Federal Reserve (Fed) decided to keep interest rates steady, pressure on Bitcoin (BTC) continues due to weak spot demand from U.S. investors and institutional lack of appetite.
The U.S. Federal Reserve (Fed) decided to keep interest rates steady in the 3.50% to 3.75% range during its meeting on July 29th. This decision, reached with a 9-to-3 vote, was not enough to create the new liquidity wave expected in the markets. While the Bitcoin price remains stagnant despite this macroeconomic decision, CryptoQuant data shows that internal demand in the market is still limited.
The Coinbase Premium Index trending in deep negative territory at -0.11 proves that the Bitcoin price is lower on the U.S.-based Coinbase exchange compared to global exchanges. This situation indicates that spot demand from U.S. institutional investors and retail users remains quite weak. Local institutions’ reluctance to absorb market supply is preventing the price from gaining upward momentum.
U.S. Spot Demand and Exchange Reserves Sounding the Alarm
The increase in exchange reserves stands out as another key factor heightening the risk of selling pressure in the market. Reserves, which have been rising since the bottom levels in April, have reached approximately 2.72 million BTC. Investors holding more sellable assets on exchanges creates an additional burden on the price during this period of weak demand.
CME options, an indicator of institutional interest, have experienced a sharp contraction since their peak in the first quarter of the year. While the total open interest remains below the 100-day average, it is notable that the concentration in CME futures is in short-term contracts. This picture shows that investors are acting for hedging purposes rather than a clear expectation of a rally. For Bitcoin to experience a lasting recovery, falling yields, improved ETF flows, the Coinbase premium approaching zero, and declining exchange reserves are needed. Current conditions suggest that a significant price squeeze could occur in the market.