Bitcoin started August with the market turning its attention to the Federal Reserve’s recent interest rate guidance and the improved odds of Kamala Harris defeating her pro-crypto candidate Donald Trump in the U.S. presidential election.
Fed keeps interest rates unchanged in July
On July 31, Federal Reserve Chairman Jerome Powell said they would keep the benchmark rate unchanged at the current 525-550 basis points, but they were inclined to cut rates in September if inflation continued to cool. Bitcoin began to slide during Powell's meeting, ultimately falling 5% to around $63,400 on August 1. BTC's price reaction was similar to its previous reactions to the Fed's 2024 rate decision. For example, after the June 12 FOMC meeting, the price fell by about 7.25%. Similarly, after the May 1 FOMC meeting, it fell by more than 7%.
This pattern of declines after each FOMC meeting highlights the growing de-risking trend among investors. Due to the uncertainty created by the Fed’s policy decisions and the economic outlook, investors generally reduce their exposure to riskier assets, which is why Bitcoin’s price fell today.
Kamala Harris Could Outperform Trump
The price of Bitcoin appears to have fallen further today as the odds of Kamala Harris winning the November U.S. election by defeating her pro-crypto rival Donald Trump increase.
On July 31, Harris made progress in key swing states for the first time since launching her presidential campaign, receiving 48% support compared to Trump's 47%. Her odds of winning on the Polymarket betting platform also improved, although she is behind Trump.
Bitcoin's price could fall if investors perceive the likelihood of stricter cryptocurrency regulation to increase under a potential Democratic administration. Harris's progress in key swing states could heighten those concerns.
Mt. Gox Moves Another Batch of BTC
Bitcoin’s drop today follows the transfer of 47,000 BTC (worth approximately $3.02 billion) from Mt. Gox to cryptocurrency exchanges Kraken and Bitstamp on July 30. The transfer was part of the ongoing process of distributing recovered funds among Mt. Gox’s creditors.
The transfer period coincided with heightened sales activity at one of the designated exchanges, Kraken.
According to data from data analytics platform Glassnode, Bitcoin’s spot cumulative volume delta (CVD) — which measures the net difference between buy and sell volume — has been tilted toward sellers since July 27 and was at its highest level on the day of the Mt. Gox transfer.
Bitcoin retreats from multi-month resistance level
From a technical perspective, Bitcoin’s decline is part of an ongoing correction that began after testing the resistance of a multi-month descending trendline that forms part of a broader descending channel pattern.
As of August 1, BTC’s price is above its 50-day exponential moving average (50-day EMA; red wave) at approximately $64,300 and is poised to rally to the channel’s upper trendline at approximately $68,250.
However, if Bitcoin decisively breaks below the 50-day EMA support, it could fall further towards the range defined by the 200-day EMA (blue wave) and the lower trendline of the channel. This range coincides with the $59,500-54,500 area.
