Bitcoin (BTC) declined by 2.3% to $110,409
this week, a move few expected after Friday’s surge when Federal Reserve (Fed)
Chair Jerome Powell revived risk sentiment. Powell almost explicitly signalled
an interest rate cut in September, citing growing risks of a cooling U.S. labour
market and the potential need for monetary easing. This dovish shift surprised
investors positively, sending BTC up 4.4% to $117,396. For a moment, it seemed
the long-awaited breakout above the stubborn $117,000–$120,000 resistance zone and
toward the extreme target of $155,000–$165,000 was finally underway.
But on Sunday, a dormant “whale” abruptly sold
$2.7 billion worth of Bitcoin, pushing prices down to $110,529. By Tuesday, BTC
had dipped as low as $108,619, its weakest level since July 9. The whale wasn’t
simply cashing out but reallocating into Ethereum (ETH), which soared 17.0% to
a new all-time high of $4,955.
BTC’s decline is also being compounded by
political risks. U.S. President Donald Trump is intensifying his campaign to
force faster Fed rate cuts, a move unsettling investors. On Monday, Trump
announced the dismissal of FOMC member Lisa Cook, but she refused to step down,
calling the decision unlawful. The legal standoff now threatens to compromise
the Fed’s credibility. If Cook continues to attend meetings while her dismissal
is under dispute, Jerome Powell could face accusations of allowing an
unauthorised participant into closed deliberations. Trump has effectively
cornered Powell, who may have little choice but to either cut rates swiftly or
formally remove Cook, an option fraught with ideological fallout. Powell’s
dovish tone last Friday may have been a direct response to such pressure.
Investors dislike signs of weakened Fed
independence, yet they also recognise the potential benefits of a faster easing
cycle. If markets start believing Trump’s influence will accelerate monetary
stimulus, they may reluctantly accept his pressure on the Fed.
Meanwhile, attention is turning to Nvidia
(NVDA), the bellwether of the AI sector, which reports Q2 2025 earnings on
Wednesday. Expectations are high, with shares edging up 1.0% to $181.77 ahead
of the release. Positive results could spark a rally across equities and spill
over into Bitcoin, potentially driving a retest of the $117,000–$120,000
resistance. Conversely, disappointing results could trigger selling in risky
assets, with BTC possibly sliding below the $107,000–$110,000 support, an area
that would likely attract strong buying interest.
Institutional flows highlight growing caution.
After $1.07 billion in inflows into spot Bitcoin ETFs such as BlackRock’s IBIT,
Fidelity’s FBTC, and Grayscale’s GBTC two weeks ago, last week saw net outflows
of $794.2 million. Large players seem to expect BTC to remain range-bound for
now, consolidating around current levels until a clearer catalyst emerges.