Bitcoin Nears $120K Before July Close Amid Fed Rate Decision and Liquidity Constraints

Sean Williams
Bitcoin (BTC)

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Key Takeaways:

  • Bitcoin remains strong above $117,000, with traders eyeing a confirmed breakout if $119,200 becomes support.
  • Macroeconomic events, including the Fed meeting and PCE inflation data, could impact BTC price action significantly this week.
  • Stablecoin liquidity constraints highlight the need for caution, as new capital inflows may be required for continued upward momentum.

Bitcoin (BTC) continues to trade near the $120,000 mark as July 2025 comes to a close, fueled by macroeconomic optimism and bullish sentiment. However, risks remain as liquidity constraints and a crucial week of U.S. economic data may test the strength of the ongoing rally.

BTC Price Holds Above $117K as Bullish Momentum Builds

After briefly surging near $120,000, Bitcoin stabilized around $119,000, maintaining critical support levels. Analysts see this consolidation as a healthy sign. Crypto trader Crypto Tony noted that maintaining levels above $117,000 could pave the way for new all-time highs. Meanwhile, analyst Rekt Capital pointed to the emergence of a bullish flag pattern, with the $119,200 zone as a key support for a breakout confirmation.

Order book data shows buy-side liquidity between $116,800 and $118,300, while liquidation heatmaps suggest a balanced market that could break in either direction depending on upcoming macro catalysts.

Fed Meeting, GDP, and PCE Data Add Macro Pressure

All eyes are on the Federal Reserve’s upcoming interest rate decision. While no rate change is expected at July’s Federal Open Market Committee (FOMC) meeting, investors hope for dovish signals ahead of the September meeting. Key economic indicators, including Q2 GDP and the Fed’s preferred inflation gauge (PCE), will also be released this week.

President Trump has openly called on Fed Chair Jerome Powell to cut rates, but Powell has so far resisted, citing mixed inflation and labor data. According to CME’s FedWatch tool, rate cuts are still seen as more likely later in the year.

US-EU Trade Deal Boosts Risk Sentiment

Markets received a surprise boost after the U.S. finalized a major trade agreement with the EU and Japan, while delaying tariffs on Chinese imports. The S&P 500 responded with a record-breaking open above 6,400, underscoring the risk-on mood. Economists credit rising M2 money supply and easing trade tensions for the rally in both equities and crypto.

As past market cycles have shown, Bitcoin’s price tends to follow liquidity trends closely. With M2 now making new highs, BTC could find continued support if liquidity flows persist.

Also Read: Metaplanet Adds 780 BTC, Hits 17,132 Bitcoin Total

Despite bullish price action, on-chain data from CryptoQuant reveals that the Stablecoin Supply Ratio (SSR) has been rising, signaling tightening liquidity. When SSR increases alongside BTC price, it often indicates a lack of fresh capital entering the market to sustain buying momentum.

“Liquidity is weak, and therefore the market lacks the high purchasing power to support Bitcoin,” explained analyst Arab Chain. Unless stablecoin reserves rise meaningfully, Bitcoin’s upward trajectory may stall or enter a consolidation phase.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses

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