[DigitalToday reporter Yoonseo Lee] Bitcoin has entered a phase of rising volatility ahead of this week’s U.S. Federal Open Market Committee (FOMC) outcome and the personal consumption expenditures (PCE) price index.

On July 27 (local time), blockchain media outlet Cointelegraph reported that markets are watching whether the U.S. rate path could turn hawkish again and how the fallout will be reflected in risk assets, including bitcoin.

A key factor is the FOMC rate decision scheduled for July 29. The Federal Reserve led by Kevin Warsh has, until recently, refrained from sending dovish signals. The U.S. 2-year Treasury yield rose to 4.3 percent last week. CME Group’s FedWatch reflected a 31 percent chance of a rate hike this week. The odds of a hike at the September meeting were discussed as high as 50 percent.

Still, early in the week oil prices plunged as the United States and Iran stopped attacks, and rate-hike expectations eased somewhat. West Texas Intermediate (WTI) fell to around $83 a barrel. Markets showed a move to price in the possibility of easing tensions again. Market analysis firm The Kobeissi Letter assessed that the market has begun to reflect a peace agreement again.

The Fed’s inflation assessment is also a burden. In earlier remarks, Kevin Warsh said inflation remains above the committee’s 2 percent target, and supply shocks in some sectors, including energy, are driving price increases. In this situation, the PCE data due on July 30 is seen as an indicator to gauge the inflation trend after the Middle East variable. The International Monetary Economics Network (IMEN) expected the June PCE rise to come in at 3.7 percent year on year, slightly lower than May’s 4.1 percent.

Market reactions are mixed by asset. The correlation between bitcoin and major U.S. stock indexes has recently weakened, but the possibility remains that the two asset classes could move in the same direction again if geopolitical shocks and worsening macro variables overlap.

U.S. corporate earnings largely beat expectations, but big tech stocks extended losses last week. The Magnificent 7 (M7) fell a combined 5.3 percent through Friday. Mosaic Asset Company warned that the S&P 500 has already slipped below its 50-day moving average and, if support at the triangular trend line breaks, it could test the 200-day moving average, currently near the 7,000 level.

After the weekly close, bitcoin rose to $65,680 on Bitstamp, marking a fresh local high. It is still within its existing range, and the 50-month exponential moving average (EMA) is acting as resistance. Analyst Rekt Capital saw that as sell-dominant trading volume grows, the likelihood increases that the price will be pushed back at the resistance level.

Fund flows showed a temperature gap between whales and retail investors. According to CryptoQuant, of the bitcoin that flowed into Binance since June 12, whale volumes fell by up to 44 percent, and retail volumes fell 22 percent. Current retail inflows are about twice the level of whales, and the gap was tallied at $3.9 billion. Analyst Amr Taha defined this FOMC as a key macro catalyst and said the Fed decision could be an important test that determines whether the current retail-whale divergence persists or converges again.

Against this backdrop, the bitcoin market this week is facing a period in which the rate decision, PCE inflation, the Middle East situation, U.S. stock market correction pressure and the structure of exchange inflows are reflected in prices at once. A short-term rebound has continued, but macro variables and selling pressure remain at the same time, leaving direction still unstable.