Bitcoin recovered from this week’s four-month low of 77k, rising to 84k, but momentum stalled, and BTC hovers around 82k at the time of writing. While BTC is up 1% over the past 24 hours, it trades down over 4% this week and down over 20% from its record high just over a month ago.
Bearish Indicators Stack Up
Institutional demand evaporates
Institutional demand continues to evaporate. According to SoSoValue, Bitcoin ETFs have experienced outflows of $870.39 million so far this week, marking the fifth straight week of outflows and the longest stretch of weekly outflows since BTC launched in January 2024. The data suggests that institutions are rethinking their Bitcoin Strategy. Persistent Bitcoin ETF outflows could keep the BTC price under pressure.
Bitcoin dominance remains above 60%
It’s not just Bitcoin that trades lower this week. Bitcoin dominance remains above 60%, signaling that capital isn’t flowing into altcoins either. Cryptocurrencies across the board have come under pressure, with the crypto market capitalisation falling over $1 trillion from its January peak of $3.69 billion to current levels of $2.71 billion as liquidity leaves the market.
Crypto trading volume declines
According to CoinGecko data, crypto-wide trading volume rose to $440 billion in February and has since tanked 63% to $163 billion. When trading volumes drop, even amid slight price recoveries, this typically indicates declining trader enthusiasm.
Distribution dominates
Glassnode’s latest report shows that Bitcoin’s market structure has shifted to distribution from accumulation. The Accumulation score remains close to 0.1, reflecting persistent sell pressure since January. Many short-term holders are also selling at a loss with the STH Spent Output Profit Ratio holding below 1.
With distribution dominating and buyers reluctant to re-enter the market, a deeper selloff could be on the cards.
US stocks extend losses
At the same time, US stocks have also come under pressure. While US equities point to a stronger start on Friday, the Nasdaq 100 is still in correction territory, down over 10% from its record high, and the S&P 500 is also trading 8.5% lower. Given Bitcoin's strong correlation to US stocks, particularly over the medium to long term, any recovery in Bitcoin could struggle while stocks remain depressed.
Trade Wars and Recession Fears Hit Sentiment
Risk assets are struggling as trade wars ramp up and US recession worries rise. This week, Trump applied 25% trade tariffs to steel and aluminum imports, spurring retaliatory moves from the EU and Canada. Trump also threatened 200% tariffs on EU alcohol imports and is expected to impose worldwide reciprocal tariffs on April 2. Concerns over the potential impact of trade tariffs on the US economy have fuelled slowdown worries.
US inflation data was favourable, cooling more than expected. However, this data doesn’t yet reflect the increased inflationary pressures expected due to the trade tariffs.
Looking Ahead
Attention will now turn to US Michigan Sentiment and Inflation Expectations, which are expected to be negatively influenced by Trump’s trade policies. Deteriorating sentiment and rising inflation expectations could keep Bitcoin demand depressed.
Next week’s Federal Reserve meeting will also be a key focus for further clues on the Fed’s outlook for rate cuts. No rate cut is expected in March, but three rate cuts are priced in this year. A cautious sounding Fed could fuel further declines.
BTC Technical Analysis
BTC trades below its falling trendline from mid-January and remains below the 200 SMA in a bearish pattern, with strong volume.
Support at 80k has broadly held. This is the level that sellers would need to break below in order to extend losses towards 75k, the round number. Below 72k, the 61.8% Fib retracement level comes into focus.
The RSI bullish divergence may encourage buyers. A rise above the 200 SMA at 83.3k could open the door to further gains. Buyers would need to rise above 90k to negate the near-term selloff.
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