Split Fed expectations and defensive positioning could fuel Bitcoin price volatility
Rising market sell order volume and declining Open Interest pointed toward defensive positioning from crypto traders.
The Federal Reserve is set to announce its interest rate decision on Wednesday, July 29. According to the FedWatch tool, there is a 64.2% probability that rates stay flat and a 35.8% probability of a 25 bps rate hike.
This makes for some of the most divided market expectations regarding a rate decision in recent history, observed The Kobeissi Letter. In a post on X, the global capital markets commentary wrote that “Fed Chair Warsh has effectively eliminated forward guidance”, which added to the market uncertainty.
Most of the market appeared prepared for a decision of no hike in rates. What will the impact of the decision be on the Bitcoin [BTC] price?
Crypto traders adopt defensive positioning ahead of policy decision
Bitcoin is down 3.10% over the past week but has rallied 2.10% over the past 24 hours. On Tuesday, July 28, the Bitcoin price dived to a local low of $62.7k.
The 7-day taker position sank to -3.43, the lowest in a year. This meant that market sell orders had seized considerable dominance in the latest trading period. Moreover, this sell pressure came ahead of the FOMC decision.
Therefore, the intense bearish taker activity signaled defensive positioning ahead of the decision, and might not dictate the next move’s direction.
Crypto analyst Amr Taha also observed that the derivatives market underwent a broad leverage reduction on July 28. Gate.io saw a $391 million reduction, almost half the decline.
Bybit and Binance recorded Open Interest declines of $178 million and $149 million, respectively. Traders were reducing exposure across exchanges, the analyst concluded.
Bitcoin price recovery still faces structural headwinds
Since September 2025, the stablecoin inflows to Binance from whales have shrunk from $63 billion to $25 billion, demonstrated analyst Darkfost. The inflows briefly recovered after the Bitcoin price reached $60k in February.
This recovery was not sustained. It underlined the prevalent weakness in whale demand.
The Bitcoin price trajectory also remained bearish. The 4-hour timeframe’s swing structure was bearish. A rally beyond $67.2k is needed to flip this structure bullishly.
The losses of the past week and the inability to convincingly flip the 78.6% retracement level at $65.2k to support were factors that showed bears have the upper hand in the short-term.
Final Summary
- Rising market sell order volume and declining Open Interest pointed toward defensive positioning from crypto traders.
- A rally beyond $67.2k is needed to flip the Bitcoin price swing structure bullishly in the lower timeframes.
