Bitcoin Drops 2% to $105,100 Amid Fed Rate Holds, Political Tensions

Bitcoin's price experienced a significant decline, falling to $105,100 after reaching a record close in June at $107,171. This drop was not due to a single event but rather a combination of macroeconomic factors, political tensions, and market-specific conditions. The strong U.S. economic data, which indicated a robust economy, implied that the Federal Reserve would not lower interest rates in the near future. This was a headwind for Bitcoin, as lower interest rates typically benefit risk assets like Bitcoin. The delay in interest rate cuts, with more than 75% of market players anticipating the Fed holding rates unchanged in July, further hindered new money from entering Bitcoin.

Adding to the market jitters was the public feud between Elon Musk and President Donald Trump. Musk's criticism of Trump's policies and Trump's retaliatory remarks sent a jolt to investor sentiment, further fueling market confusion. Political chatter such as this can rapidly change risk mood, particularly with a volatile instrument like Bitcoin.

Following 15 days of inflows to spot Bitcoin ETFs, $342 million left in a single day. Fidelity’s FBTC lost $172.7 million, while Grayscale’s GBTC lost $119.5 million. Even smaller funds such as Bitwise and Ark 21Shares experienced $20M+ in outflows. This abrupt turn from consistent ETF demand spooked investors, particularly those monitoring institutional sentiment. ETFs had previously been a source of strength for BTC in early 2025, so this decline was palpable.

Large Bitcoin withdrawals to exchanges also instilled concern. On-chain statistics showed that a whale transferred 1,595 BTC worth more than $168 million to Binance. Such large transactions are usually interpreted as getting ready to sell, which can unsettle retail traders. CoinMarketCap statistics indicate $85 million in liquidations occurred within the past 24 hours — the majority of them of long positions. More than 100,000 traders were liquidated. These sellouts support a bearish storyline and contribute to panic selling.

Despite the price decline, large institutions continued to accumulate BTC, indicating long-term faith. MicroStrategy purchased 4,980 BTC, demonstrating strong corporate adoption momentum. Japanese company Metaplanet purchased 1,005 BTC and now possesses 13,350 BTC, replacing Cleanspark as the 5th largest corporate BTC owner. These companies are not responding to short-term price fluctuations but are taking dips as a chance to buy. Their ongoing participation indicates that the institutional base of Bitcoin is expanding, particularly in regulated markets and long-term investment portfolios. This institutional base might propel BTC’s next leg higher, even with today’s price weakness.

In summary, Bitcoin's fall was driven by macroeconomic pressure, delayed interest rate reductions, whale disposals, and political tensions. Spot ETF redemptions and excessive trader liquidations contributed to the strain. However, institutions such as MicroStrategy and Metaplanet are adding BTC, indicating that short-term uncertainty remains while institutional support and favorable trends suggest possible rebounding and long-run expansion towards $168K in case of stabilization in overall conditions.