Fed signals inflation cooling just as Bitcoin tests key support — bounce play on
Thesis
Bitcoin has been under relentless pressure, with nearly $4 billion pulled from spot ETFs in June alone as traders feared aggressive Fed rate hikes. That selling pressure pushed BTC down to test the critical $60,000 support level — a line it has struggled to hold. The catalyst for a bounce arrived on July 1st when Fed Chair Warsh noted that inflation risks have come down, prompting Bitcoin to immediately reclaim $60K. While Warsh hasn't officially ruled out a hike at the next meeting, his dovish pivot on inflation directly removes the primary fear that drove the June ETF exodus. With leverage cleaned out and $60K holding as support, the setup is for a relief rally back toward the mid-$60K range as short-sellers cover.
Strategy approach
Build a mean-reversion strategy on BTC-USD using the H4 timeframe. Identify entries when price touches or dips below the psychologically key $60,000 level and RSI(14) falls below 35 (oversold), but only enter if the previous daily candle closed green. Set a stop loss at $57,500 (roughly 4% below the $60K floor) and target a move back to the 20-day moving average, with a max hold of 10 days.