The cryptocurrency market is experiencing volatility, with Bitcoin trading at $89,440, significantly lower than its peak of $126,300. Analysts are raising alarms about the possibility of a further decline to around $80,000 in the near future.
Technical indicators suggest a bearish trend for BTC. The weekly chart reveals multiple bearish patterns, including a large rising wedge that has now been broken. This pattern consists of two ascending and converging trendlines, with Bitcoin falling below the lower trendline, signaling a bearish outlook. Additionally, the price has slipped beneath the 50-week Exponential Moving Average, and the Supertrend indicator has remained in the red since October of the previous year, indicating sustained downward pressure.
The formation of a bearish pennant pattern further supports the bearish forecast. This pattern comprises a vertical line and a symmetrical triangle, suggesting that a decline is imminent. Analysts now identify a critical support level at the November low of $80,400. A breach below this threshold could lead to further declines, potentially reaching the 50% Fibonacci Retracement level around $71,000.
ETF Outflows Indicate Weakening Demand
Another contributing factor to Bitcoin”s potential decline is the ongoing outflow from spot Bitcoin exchange-traded funds (ETFs). Recent data from SoSoValue indicates that these ETFs have witnessed substantial asset withdrawals in recent days, amounting to over $103 million in just one day and a total of $1.3 billion for the week. This marks the most significant outflow since November of the prior year.
The iShares Bitcoin Trust, one of the largest Bitcoin ETFs, has seen its assets decrease from over $90 billion to $69.7 billion, reflecting a growing trend of American investors moving their funds into traditional safe havens like gold and the stock market.
Bitcoin”s Safe-Haven Status in Question
Historically, Bitcoin has been regarded as a safe-haven asset, largely due to its scarcity and the increasing demand for it. However, recent performance challenges this narrative. For instance, while Bitcoin”s price declined this week, traditional safe-haven assets like gold surged to record highs. Investors have begun to rotate their capital from Bitcoin into gold and silver, which are currently outperforming Bitcoin.
Gold has recently reached $5,000, and silver has crossed a significant resistance level at $100. This shift in investment patterns has resulted in the SPDR Gold ETF seeing over $15 billion in inflows, while the iShares Silver ETF has also gained billions in assets.
Furthermore, some Bitcoin treasury companies are facing increased pressure, and there are concerns that they may soon liquidate their holdings. For example, GameStop recently moved its Bitcoin assets to Coinbase Pro, indicating potential capitulation. Other firms may follow suit, selling assets to settle debts and finance other initiatives.
As the market landscape evolves, the outlook for Bitcoin remains uncertain. Investors should closely monitor these developments as they could significantly impact Bitcoin”s price in the coming weeks.
