Key Insights:
- Bitcoin price is trading lower after failing to hold the $80k level. The decline has been occurring this week despite heavy Bitcoin ETF inflows over the last 30 days.
- The key price level to watch that could throw off the institutional confidence.
- Bond market woes and a worsening macroeconomic picture appear to be hammering down on sentiment.
After pushing above $80,000 late last week, Bitcoin price appears to be favoring the bears this week. A sign that momentum is dwindling, and profit-taking may continue to suppress the price unless fresh momentum emerges.
BTC price surged as high as $82,281 on Thursday last week. A week later, it has already retreated by about 5%, which may not seem much in the grand scheme of market corrections.
Nevertheless, this pullback signals that the bullish momentum observed in the second half of August might be over. BTC price was down to $77,976 at press time.
The Bitcoin price had previously spent over 10 days in overbought territory before the pullback. Traders are now keen to observe whether sell pressure intensifies or the price demonstrates resilience. The outcome will determine whether bulls will regain momentum.
Bitcoin ETFs Were at the Heart of the August Rally
The Bullish BTC price pulse in the second half of August was backed by robust institutional inflows. According to CryptoQuant, Bitcoin ETFs recorded roughly $21.9 billion in positive net flows over the last 30 days.
Bitcoin ETFs previously experienced overall negative net flows in Q2. The latest spike in bullish activity has now pushed the ETFs’ cost basis into a strong positive level.
CryptoQuant also noted that the next key price level to watch was between $72,000 and $73,000. This is because at that range, Bitcoin ETFs are above their realized price.
Losing that range means ETFs would be below the cost basis. Such an outcome may pressure ETFs to offload more coins, thereby creating additional sell pressure.
Sustained Bitcoin ETF flows and a positive Coinbase premium would still signal institutional demand. Bitcoin ETFs have already sold off about $166 million worth of BTC in the last 2 days. Despite this, market sentiment remained in greed territory.
Bond Markets and Unfavorable Macros Weigh Heavily on Bitcoin Price
Beyond the technicals, macroeconomic factors appear to have a significant impact on the price of Bitcoin. CryptoQuant analyst Darkfost noted that the Bitcoin price rally in the second half of August occurred under a struggling bond market.
He noted that the Treasury announced buybacks as an intervention just as the BTC price was rallying. At the same time, intensifying conflict with Iran and rising oil prices have sent mixed signals to the market.
For context, rising geopolitical tensions have negatively affected investor sentiment. This may be a contributing factor to the declining BTC price.
The recent retracement also demonstrated an inverse relationship with the DXY. If the DXY continues to push above 100, Bitcoin price may demonstrate continued weakness. It bounced back to 99 in the last 24 hours after previously demonstrating signs of an upward pivot.
The DXY is currently worth watching because it reflects whether the US bond buyback efforts are working. On the other hand, it could decline if those short-term efforts fail.
The DXY is currently one of the key determinants of dollar value. A debt-induced devaluation may be the signal that investors need to shift their liquidity into assets that can better hold value than fiat.
Bitcoin has recently demonstrated significant correlation with gold. It may thus be among the go-to assets under such conditions.
