#TopContentChallenge#  "The largest trade deal in history" — 5 factors that will impact the Bitcoin market

Bitcoin (BTC) is targeting $120,000 by the close of July, and the BTC price recovery remains strong.

BTC price action offers market participants the prospect of renewed all-time highs, while the threat of a drop to $113,000 remains.

This week of intense US macro data releases is compounded by the Fed meeting on interest rates, which puts pressure on Chairman Jerome Powell.

The US-EU trade agreement provided immediate support for risk assets, including a record opening in futures.

While Bitcoin's July 2025 performance appears impressive, it still has a long way to go to outperform historical norms.

Stablecoin liquidity suggests bulls may have to wait before gaining momentum to re-engage in price discovery.

Bitcoin bulls are racing towards $120,000.

The rally towards the end of the week pushed the Bitcoin price close to $120,000, but the momentum couldn't be sustained.

BTCUSD, however, managed to hold the $119,000 region, giving market participants confidence for the upcoming upward move.

If Bitcoin holds firm and holds above $117,000, we're poised for new all-time highs very soon.

Bitcoin's weekly close of $119,450 sparked a bull pennant.

Along with an illustrative chart, it stated, "In this case, a retest of support around $119,200 could occur next week (perhaps even through a wick)."

"However, for now, BTC needs to avoid a wick breaking above the upper resistance of the bull pennant. Otherwise, the price will remain within the range."

Exchange order books show two key areas above and below the price, while analysis has raised the possibility of a return to $113,000.

Regarding market liquidations, they stated, "BTC is currently approximately 58.7% long and 41.3% short. This suggests there's a reasonable amount of fuel for an upward move if short positions are liquidated, but not enough to warrant a 'squeeze.'"

"This balance suggests the price could continue its sideways fluctuations before one side clearly takes a position."

According to the latest data, buying liquidity is gradually aligned between $116,800 and $118,300.

Focus on Powell during FOMC week

While most of July has been relatively quiet in terms of US macroeconomic data, the picture is about to change.

The Fed's interest rate decision will be one of the most important topics in the coming days, but it's not the only development of interest for risk-asset investors.

Just a few hours before Wednesday's Federal Open Market Committee (FOMC) meeting, second-quarter GDP data will be released. The following day, the Personal Consumption Expenditures (PCE) index, the Fed's "preferred" inflation indicator, will be released.

Corporate earnings are also continuing to roll in, making it the "busiest data-related week of the year."

This data comes at a critical time for markets. The current divergence between government expectations and Fed policy is spilling into the public sphere, with President Donald Trump directly calling on Fed Chair Jerome Powell to cut interest rates.

Powell, meanwhile, maintained his hawkish stance through 2025, as inflation data remains mixed and the labor market remains resilient while costs are cooling. This has allowed the Fed to maintain its current policy.

Markets view the likelihood of an FOMC rate cut this week as virtually zero, and expectations for the September meeting remain strong.

While no interest rate changes are expected at the July meeting, investors will be focusing on signals of interest rate cuts for the rest of the year.

“Inflation concerns will continue to weigh on the outlook. The impact of tariffs was evident in the latest Consumer Price Index (CPI) report.”

The June CPI data came in above expectations.

Progress on the US trade agreement lifted risk assets.

The development that offset the uncertainties stemming from macro data was positive for markets: The US finalized trade agreements with the EU and Japan, while postponing the planned implementation of tariffs on China by 90 days.

These developments had an immediate impact on market sentiment and risk asset performance.

US stock futures jumped, opening above 6,400 for the first time in history following the trade announcements.

Both Trump and European Commission President Ursula Von Der Leyen described this outcome as "the largest trade agreement in history," with Von Der Leyen emphasizing that the US and EU together account for 44 percent of global GDP.

The economic backdrop in the US also supports risk asset growth. Specifically, the US money supply increased by 4.5 percent year-over-year.

The money supply bottomed out and has been recovering since 2023. Now, along with major stock market indices, it is reaching new record highs.

Bitcoin and crypto performance have historically been closely linked to global money supply liquidity trends.

Another July for Bitcoin?

While Bitcoin, at around $120,000, has been a strong performer for bulls this month, historically, July is generally stronger.

BTCUSD rose 11.3 percent in July 2025, representing a rate only slightly above the 12-year average.

Since 2013, the average price increase in July has been 7.85 percent, while the median gains have been 9.6 percent.

Even in 2022, Bitcoin's most recent bear market year, July saw a rise of nearly 17 percent.

As the monthly candlestick close approaches, it's crucial for bulls to hold onto gains from early July.

With a chart targeting $141,300, the breakout from the first week of July occurred with a long white candle.

"Holding those gains is crucial in this pullback. This indicates positive momentum. So far, the price has remained well above the horizontal support at $109,000."

BTCUSD's average return in August is much less impressive: only 1.75 percent.

Stablecoin liquidity raises questions.

Those hoping for a rapid continuation of the Bitcoin bull market may have to wait a while longer.

It's a factor limiting the BTC price's rise.

The stablecoin supply ratio is rising along with the BTCUSD. This suggests that the market may lack liquidity for investment-friendly stablecoins.

A rising indicator indicates that stablecoins are scarce compared to Bitcoin's volume. In other words, liquidity is weak, and therefore, there isn't a strong buying power in the market to support Bitcoin.

A rise in Bitcoin's price along with the rising indicator suggests that this rise occurred without a corresponding influx of new stablecoins into the market. A continued rise in the indicator could indicate that buying momentum may weaken in the future due to low liquidity.

The stablecoin supply ratio last reached an all-time high in November 2024. While it approached this level on July 14th, it has not yet been surpassed.

Therefore, the market may be entering a "temporary saturation period."

"This suggests that the market is still partially supported by liquidity, but a significant increase in stablecoin reserves is required in the coming days for Bitcoin to continue its upward trend."