As an experienced financial analyst, I’ve seen my fair share of market volatility and price movements in various assets over the years. The recent events surrounding Bitcoin and the Spot Bitcoin ETFs have caught my attention, and based on the available data, it seems that we could be in for a potential correction or even a bearish trend.
For the first time ever, each and every Spot Bitcoin ETF experienced a withdrawal day, collectively resulting in a substantial $563 million withdrawal on Wednesday. The price of Bitcoin hovers precariously close to a possible additional decline.
FOMC announcement sparks short-lived rally
As a crypto investor following the economic landscape closely, I’ve just learned that the Federal Reserve’s FOMC meeting took place on Wednesday. During the event, Chairman Jerome Powell shared his concerns about the recent stall in progress towards bringing inflation back to the 2% target. Consequently, he announced that interest rates would remain unchanged based on this assessment.
Following his speech, there was a surge in both the stock market and crypto markets. Bitcoin momentarily rose above $59,000, but this gain proved fleeting. It now appears that bitcoin’s price increase served only to touch the lower boundary of its bull flag before plunging back down, below $57,000.
Spot Bitcoin ETFs suffer big outflow
For the first time since their debut on January 11, all funds experienced a net withdrawal on that day, collectively leading to a significant $563.7 million outflow. Even the Blackrock IBIT ETF, which had previously seen no activity for five consecutive days, recorded a net sale of $36.9 million on Wednesday.
It seems that some investors who purchased Bitcoin ($BTC) through ETFs within the past few months have become nervous and chose to sell a portion of their holdings from earlier in the year. This selling behavior is likely from retail investors, as institutions are better equipped to handle market volatility and may intend to maintain their positions for an extended period.
$BTC continuing to roll over
In the short term perspective, the recent contact with the bottom of what was previously identified as a bull flag and its current role as resistance raises doubts about its authenticity. This is because there were fewer than three touches at the flag’s peak prior to this price action, which could indicate that we are witnessing a reversal in the price trend for Bitcoin ($BTC).
Upside momentum is coming, but $51,000 first?
Based on the weekly chart’s analysis, the Bitcoin price is showing signs of returning to the $51,000 support level. The timing depends on how long it takes for the weekly stochastic RSI to reach its lowest point and subsequently rebound. Historically, a cross-up event occurs approximately every six months, leading to robust upside momentum that could potentially lift the Bitcoin price back towards previous highs.
Based on current circumstances, we might be in for an extended period of price volatility before a potential shift in Bitcoin’s trend. For long-term investors holding Bitcoin, this turbulence is merely background noise. In the grand scheme of things, Bitcoin is in a bull market, and corrections are normal and necessary components of a healthy market cycle. These fluctuations do not signify an enduring trend.
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2024-05-02 13:11