(Kitco News) – Cryptocurrency bears have once again made their presence felt in the market as Friday has seen Bitcoin (BTC) retest support at $63,000, with bulls looking like they may need to retreat to lower support levels to regroup.
The weakness comes after the spot Bitcoin exchange-traded funds (ETF) have collectively recorded four straight days of outflows, the longest streak since the ETFs launched in early January.
Data provided by Farside shows that starting Monday, outflows of $154.3 million, $326.2 million, $261.5 million, and $94 million were recorded each succeeding day this week for a total of $836 million.
Grayscale’s GBTC continues to be the primary source of outflows. In contrast to recent weeks where heavy inflows into BlackRock’s IBIT and Fidelity’s FBTC ETFs helped to offset the GBTC drawdown, inflows into these products have fallen precipitously, leading to the string of net negative days.
Since the outflows picked up, Bitcoin’s price has declined 7.2%, sliding from $68,900 on Monday to its current price near $64,000.
BTC/USD Chart by TradingView
According to a research report released by JPMorgan on Thursday, while optimism is high that Bitcoin will hit new highs by the end of 2024, in the short term, its price could continue to trend lower as traders sell ahead of the approaching halving.
“There remains considerable optimism in the market over the prospect for prices rising significantly by year-end, with a significant component of that optimism arising from a view that Bitcoin demand via spot exchange-traded funds (ETFs) would continue at the same pace even as the supply of Bitcoin diminishes after the halving event,” analysts led by Nikolaos Panigirtzoglou wrote.
“This challenges the notion that the spot Bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow,” they said. “In fact, as we approach the halving event this profit-taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.”
The outflows have helped to bring many market participants back down to reality as the historic inflows since the ETFs launched had some proclaiming that Bitcoin would hit $100,000 before the halving, falling victim to the ‘up only’ mentality in regards to both BTC price and ETF inflows.
To more experienced analysts, this week’s pullback is a good sign as it represents the type of movements seen in a healthy, properly functioning market.
"This week Bitcoin fell over 17%, Ethereum over 25%, and the total market cap was down around 18%. However, the market has since seen a sharp rebound, with most assets recovering more than half of their losses in the last 24 hours,” said Rachel Lin, co-founder and CEO of SynFutures. “As of this report's writing, BTC is down 8%, and ETH is down 10%.”
“Looking at Fibonacci retracement, we notice that BTC has bounced back up from the 0.382 level while ETH has bounced back from 0.5,” Lin said. “The chart shows that Wednesday's green candle has completely reversed Tuesday's red candle, with more volume than Tuesday's. More importantly, this happened amidst negative news and FUD about the SEC potentially targeting Ethereum. This could arguably be a sign of a healthy market correction.”
She said that while most of the market signs are positive, “we still need to watch how this bounce plays out. In a bearish scenario, the market could make a lower high and a lower low, meaning the correction will take a long time to play out. On the other hand, if we see a quick upmove back to all-time highs, then it'd be safe to assume the correction has already played out.”
“The continued volatility has removed a lot of leverage from the market as both bulls and bears are getting liquidated due to the current choppy trend. The fundamentals are also mixed as we got news about the SEC investigating Ethereum and Blackrock launching its first tokenized fund on Ethereum within 2 hours,” Lin concluded. “Overall, it is a bearish week, which is showing signs of a bullish turn but has not been confirmed yet."
While many are now in agreement that Bitcoin could show weakness, or at the very least, increased volatility leading into the halving, a consensus has also emerged that post-halving, its price will rise. According to the latest update from Bernstein, the broker has raised their end-of-year BTC price forecast from $80,000 to $90,000.
