Market analysis for July 31, 2025
Early yesterday morning, the market experienced a significant pullback, with Bitcoin dropping below 116,000 and Ethereum falling below 3,600. Although the decline was not large, it slightly exceeded market expectations compared to the recent strong trends. The reason for the sharp drop is the Federal Reserve's stance on interest rate cuts in September. Based on Powell's statements, there is no certainty of a rate cut in September; everything depends on market data. One could even say that the probability of maintaining the current market interest rate in September for the sixth time exceeds 50%, which has broken market expectations. Currently, the market's probability of no rate cut in September has risen from 33.6% to 51.8%.
I have to say, Powell is quite stubborn. Trump has publicly expressed his dissatisfaction with the Federal Reserve's high interest rate monetary policy multiple times and has threatened to fire him if there are no interest rate cuts. From yesterday's hawkish speech, Powell remains unmoved and continues to firmly maintain the Fed's independence, which may also be a fundamental reason for the continued strength of the dollar. Regardless, if there are no interest rate cuts in September, it will indeed break market expectations, which is also an important reason for yesterday's short-term decline. However, the good news is that the US stock market shows no signs of reversing for now, and by the morning, the prices of Bitcoin and Ethereum have gradually recovered.
Especially for ETH, it has now reached the 3,900 level again, and the strength of this rebound is undeniable. One important reason is that institutions are still frantically acquiring, and the micro-strategy dispute over Ethereum is not yet over. Based on the estimated amounts, this can only be considered the first half. If Ethereum can still achieve a strong rebound under the broken interest rate cut expectations, I believe the probability of breaking 4,100 exceeds 80%. After all, there is a month left for the market; even if there is no rate cut in September, this month is enough for various 'micro-strategies' to drive up Ethereum's price.
From my hedge position, the short positions slightly prevail, indicating that the short-term market frenzy of the past 1-2 weeks has eased, especially the momentum of altcoins has temporarily stopped, with an average pullback of about 10%. This is considered a positive signal in a bull market process, as the market always needs some pullbacks to calm emotions, which will provide momentum in subsequent trends. The most critical point now is Ethereum's resistance level; when it breaks through, I have a very high expectation for a breakthrough in August. Therefore, at this position, I will continue to make some small fluctuations with mainstream coins, patiently waiting for Ethereum's new highs.
Thank you for your attention and likes, let's wait together for the arrival of new highs.
