Bitcoin Recovers After Fed Interest Rate Hike, But Bears Can Still Win Friday's $1.76 Billion Options Expiry

BTC targets $360 million profit when $1.76 billion monthly options expire on July 29, but the FOMC's decision on interest rates could play a decisive role.

Bitcoin (BTC) price has been stuck in a descending channel since July 20 and is currently heading towards the $20,000 support by the end of July. Adding to this price drop, BTC is down 50% year-to-date, while US-listed tech stocks, as measured by the Nasdaq-100 index, have racked up a 24% loss.

Bitcoin USD price index, 4 hours. Source: TradingView

As the US Federal Reserve tightens economic policies by raising interest rates and reducing debt purchases, risk assets have reacted negatively. Fed Chairman Jerome Powell is due to wrap up a two-day meeting on July 27, and market analysts expect nominal interest rates to rise 0.75%.

Tensions in Europe are escalating as Russian gas company Gazprom is set to cut off supply to the Nord Stream 1 gas pipeline from July 27. According to CNBC, the company blames a problem with the maintenance of the turbines, but European officials believe otherwise.

On July 27, technology stock performance was boosted by the US Senate's approval of the Chips and Science Bill, which provides $52 billion in debt and tax-backed subsidies for the production of semiconductors in the United States. An additional $24 billion in funding for the sector is estimated, aimed at boosting research to compete with China.

For these reasons, traders have mixed feelings about the upcoming Fed announcement and the impact of a global crisis on cryptocurrency markets. As long as Bitcoin's correlation to traditional markets remains high, especially tech stocks, investors will seek protection by moving away from risky assets...