Bitcoin Struggles with Largest ETF Outflows in Months, Testing Key Support Levels
With $287M exiting Bitcoin ETFs and a drop in active addresses, BTC’s resilience is being tested as market volatility rises ahead of major economic events | That's TradingNEWS
Bitcoin’s Market Challenges Amid ETF Outflows and Declining Active Addresses
Bitcoin ETFs Experience Major Outflows, Losing $287 Million in a Day
The cryptocurrency market faced turbulence as Bitcoin (BTC) spot ETFs saw significant outflows, shedding approximately $287.8 million in a single trading day. This marked the most substantial outflow in the past four months, with Fidelity's FBTC leading the losses at $162.3 million. Grayscale's GBTC also suffered a $50.4 million withdrawal, while ARK and BITB recorded losses of $33.6 million and $25 million, respectively. The overall market sentiment has been shaken, with Bitcoin experiencing a 3.5% price drop in 24 hours, now trading at $56,723—a significant decline from the $64,500 levels seen the previous week.
Active Addresses Drop Amid Uncertainty
Further complicating Bitcoin's short-term outlook is the decline in active addresses. Market analysts point out that the number of active Bitcoin addresses has decreased significantly, largely due to uncertainties surrounding the U.S. presidential elections and economic policies. The overall market seems to be in a holding pattern, with traders adopting a wait-and-see approach. Bitcoin's price has been moving sideways without clear direction, largely attributed to hesitation from both retail and institutional investors. On-chain data also supports this narrative, as liquidity has risen, but market participants are choosing to hold stablecoins like Tether (USDT) rather than invest directly into Bitcoin.
Short-Term Price Forecasts Remain Bearish
The technical outlook for Bitcoin suggests a bearish trend in the near term. Following the failure to hold the $57,000 support, Bitcoin may test lower levels, possibly revisiting $55,000 or even the $50,000 mark. This aligns with recent forecasts that have highlighted concerns over mining profitability post-halving. The high difficulty and hash rate have kept mining costs elevated, adding further downward pressure on the price. Some analysts, including Arthur Hayes, have suggested that Bitcoin could reach $50,000 before finding stronger support, a view shaped by macroeconomic factors such as U.S. Treasury yields nearing 5%.
Bitcoin's Hash Rate Hits All-Time High Despite Price Declines
Amid these market challenges, Bitcoin's hash rate has reached a new record high of 742 exahashes per second (EH/s), a 70% increase over the past year. This indicates that mining operations are expanding, with more computational power securing the network. The high hash rate also makes it more difficult for malicious actors to launch 51% attacks, reinforcing the network's security. Despite the price weakness, this growth in hash power reflects ongoing confidence in Bitcoin's long-term fundamentals.
Potential for a Relief Rally or Further Declines?
From a technical perspective, Bitcoin is approaching a critical support level at $56,000. A close below this level could extend the downtrend, potentially triggering further declines toward $54,000 or lower. On the other hand, if this support holds, Bitcoin may stage a relief rally, with the next key resistance level around $60,000. Momentum indicators such as the Relative Strength Index (RSI) and the Awesome Oscillator (AO) suggest weak buying interest, with both remaining below neutral levels, pointing to bearish dominance.
Market Sentiment and On-Chain Analysis
On-chain metrics reveal that many short-term Bitcoin holders are realizing losses, which could exacerbate selling pressure if this trend continues. The Short-Term Holder SOPR (Spent Output Profit Ratio) indicates that recent market participants are largely selling at a loss, a bearish signal for the broader market. However, long-term holders remain confident, as evidenced by the growing accumulation of Bitcoin by institutional investors and miners. The upcoming U.S. Federal Reserve decisions on interest rates will also be a crucial factor to watch, as expectations of rate cuts may provide support for Bitcoin’s price recovery.
Global Macro Factors Adding Pressure
External economic factors, including U.S. Treasury yields and government spending, continue to influence Bitcoin's market performance. The recent surge in 10-year Treasury yields, now approaching 5%, has tightened liquidity conditions, impacting risk assets like Bitcoin. While many investors remain optimistic about Bitcoin’s long-term prospects, the short-term outlook appears more fragile, with further price volatility expected. Additionally, the impact of geopolitical uncertainties, such as the U.S. elections and potential regulatory changes, adds another layer of complexity to Bitcoin’s near-term price action.
What’s Next for Bitcoin?
While Bitcoin's current market conditions appear challenging, long-term investors remain bullish. The increasing hash rate, institutional interest, and network security provide a strong foundation for future growth. However, in the short term, Bitcoin is likely to remain under pressure, particularly if support levels fail to hold. With liquidity rising but not yet fully deployed into Bitcoin, market participants are closely watching for signs of renewed buying interest, which could spark the next leg of the bull market.
In summary, Bitcoin's price trajectory will be heavily influenced by both technical factors, such as support levels and hash rate growth, and macroeconomic developments, including U.S. interest rate policies and liquidity conditions. Investors should prepare for potential volatility while keeping an eye on key support and resistance levels.
