Federal Reserve Momentum Fades
Bitcoin tumbled on the last day of July, shedding nearly $3,000 during a frantic 12-hour period that saw the cryptocurrency slide toward a two-week low. The plunge, a reversal from Thursday’s price action, significantly altered bitcoin’s trajectory toward a double-digit monthly gain that had looked certain 24 hours earlier.
As shown by 24-hour market data, the cryptocurrency initially traded just off $65,000 as it looked poised to maintain momentum stemming from the Federal Reserve’s decision to leave interest rates unchanged. In fact, roughly three hours before midnight, bitcoin breached the threshold on its way to an intraday peak of $65,340. However, that was the last time it traded at those levels, as a sharp sell-off wave erased nearly all of its gains from the preceding 24 hours.
Bitstamp data show that after a gradual decline to just under $63,600, a sharp sell-off lasting less than an hour dragged bitcoin to $62,369, its lowest since July 17. While a relief rally brought it back from the brink of dipping below $62,000, the recovery failed to trim much of its earlier losses, leaving it with a daily loss of approximately 3%.
The July losses, in turn, left bitcoin with weekly losses of just over 2% and cut its monthly gains from nearly 10% on Thursday to 4.5% at the time of writing (1:09 p.m. EST). Meanwhile, bitcoin’s Friday collapse pulled its market capitalization from $1.3 trillion to $1.26 trillion.
In the derivatives market, the price action was particularly brutal for traders with overleveraged long bets. Market data show that $100 million in long bets was wiped out, a fourfold increase from the $23 million liquidated some 24 hours earlier. The value of short bets liquidated in the same period was nearly $21 million. Overall, the crypto economy saw nearly $360 million in leveraged positions wiped out, with long bets accounting for nearly $235 million, or 65% of the total.
While the Federal Reserve’s decision to hold rates steady helped fuel bitcoin’s rally earlier in the week, a lack of progress in the U.S. Senate on the CLARITY Act dampened market sentiment. The legislative stalls in Washington prompted Sen. Cynthia Lummis, R-Wyo., to again plead with colleagues to pass the bill before the August recess.
However, with Senate Majority Leader John Thune yet to allocate floor time and the bill short of the 60 votes needed to pass, prediction markets have slashed the odds of its 2026 passage to roughly 30%—down from over 80% in February. Stalling the measure leaves the crypto market without a regulatory framework that analysts say is key to sustaining long-term growth.
