Bitcoin [BTC] was trading around the $64.6k mark on Thursday, July 30. The US Federal Reserve announced its decision to keep interest rates unchanged at 3.50%-3.75% on Wednesday, July 29.
Energy-related supply disruptions have kept inflation rates elevated above the target 2%, but economic activity was expanding at a solid pace, and operational interest rates were left unchanged.
Bitcoin did not see a big short-term reaction to the Fed’s hawkish stance. The short-term price structure remained bearish. The ETF flows gave their own signals, too.
Fidelity Bitcoin ETF posts $43 million outflow
A 7-day streak of Bitcoin spot ETF inflows was broken on July 23. Thereafter, four days of net outflows saw $526.5 million shed.
On July 29, the day of the rate decision from the Federal Reserve, BlackRock’s IBIT attracted $89.8 million, compared to Fidelity Bitcoin ETF’s $43.1 million outflows.
The recent ETF outflows have been interpreted by some analysts as temporary de-risking ahead of the Fed decision. Looking forward, the rate decision in September has a higher chance of a rate hike, according to the FedWatch Tool.
Indicators pick up Bitcoin local stress driven solely by price movement
The stress indicator captures local stress. Components include derivatives, exchange flows, and the price movement itself. Crypto analyst Axel Adler Jr. observed that there were two spikes in the past three days.
The one on the 28th reached a score of 52, or elevated risk.
It was a combination of exchange flows and price movement that led to elevated market stress before the rate decision. Generally, the uptick in stress in late July has not been accompanied by high price, flow, and derivatives stress drivers.
The recent behavior from these components was much different to the early June sell-off. If we see increased local stress, combined with high exchange flows and a large derivatives swing, it could be worrisome for traders and investors.
Final Summary
- The Fidelity Bitcoin ETF saw a $43.1 million outflow on Wednesday, July 29, while BlackRock’s IBIT posted $89.8 million in inflows.
- The Bitcoin local stress indicator saw elevated price stress, but none from flow and derivatives components, explaining why the stress levels were still in “Calm” territory.
