The cryptocurrency market is witnessing a significant shift as Bitcoin (BTC) has developed a bearish flag pattern on its daily chart, raising concerns about a potential price drop. Analysts are predicting that this could lead to a decrease to $75,000. Currently, Bitcoin is trading around $92,399, reflecting a 2.5% increase as it seeks to capitalize on the recent 25 basis point rate cut from the Federal Reserve.
Despite this minor uptick, Bitcoin has been trapped in a trading range between $88,000 and $93,000 throughout December. This stagnant movement is particularly notable given the softer interest rate environment, which generally boosts risk assets. Technical indicators show that Bitcoin has encountered resistance at the 50-day Exponential Moving Average and remains below the Supertrend indicator, which suggests that a substantial rebound has yet to materialize.
One of the most alarming developments is the formation of a bearish flag pattern, a technical setup that typically precedes strong price declines. Having completed the inverted flagpole section, Bitcoin is now in the flag portion of this pattern. If Bitcoin can achieve a 12-hour close above $96,000, this bearish outlook may be negated. Conversely, a drop below $86,000 could push the price under the April 2025 lows.
Adding to the bearish sentiment is the dwindling demand for Bitcoin from institutional investors. Inflows into spot Bitcoin ETFs have drastically fallen to $237 million this year, a stark decline of over $3 billion since November. On December 11, U.S. spot Bitcoin ETFs experienced a net outflow of $77.34 million, with Fidelity”s FBTC leading the way with a $104 million outflow. The situation for Ethereum ETFs is similar, with a total net outflow of $42.37 million.
The decline in ETF inflows is a sharp contrast to the robust inflows seen earlier this year, which included $5.2 billion in May and $6.02 billion in July. The current pace of inflows is significantly lower, indicating a cooling interest among institutional buyers.
Moreover, corporate adoption of Bitcoin treasury strategies has slowed considerably, with only nine companies announcing plans to include Bitcoin in their treasuries this quarter. This figure represents an 83% drop compared to 53 companies in the third quarter. While some companies continue to add to their holdings, such as Strategy, which purchased $900 million worth of Bitcoin last week, this activity appears to be the exception rather than the rule.
Analysts have identified the key support level at $87,500, and a breach below this could lead to a decline toward $80,637, marking an 11% drop from current levels. Predictions from analysts like Ted Pilows suggest that Bitcoin could face a significant downturn, with a potential target of $75,000 if bearish conditions persist. The bearish sentiment may only be reversed if Bitcoin successfully breaks above the $100,000 mark, a critical pivot point for support and resistance.
