Bitcoin Key Points
- ETF outflows, a selloff in technology stocks, and fears of an FOMC interest rate hike all represent fundamental headwinds for Bitcoin…
- …but despite those headwinds, Bitcoin’s price is bouncing sharply today off the key $80K level.
- Bitcoin remains within its October range between $80K and $87K, but if the fundamental news can shift back in a positive (or even less negative) direction, it could retest $88K in short order.
After selling off earlier in the week, Bitcoin is trying to stage a late recovery off the $80K level.
When it comes to fundamental news, Bitcoin has faced more headwinds than tailwinds so far this week. US spot Bitcoin ETFs recorded about $681 million in net outflows last week, according to market data cited by Investing.com. Flows remained uneven this week: a day of renewed buying offered some support, but the broader trend is still negative in the latest available figures:
Source: Farside Investors
Beyond the ETF outflows, the wider risk environment has also turned less supportive. Bitcoin has been weighed down by a drop in AI-driven technology stocks. The Nasdaq 100 is trading -3% lower so far this week, and given Bitcoin’s recent strong correlation with the index (0.90 over the last 50 days), that weakness has spilled over into Bitcoin prices.
From a macroeconomic and monetary policy view, higher than expected inflation readings from both the US CPI and PPI reports have revived fears of another FOMC interest rate hike at the end of the month, another potential headwind for the cryptocurrency.
…and yet, despite these apparent fundamental headwinds, Bitcoin’s price has held up relatively well. As many experienced traders know, some of the best trading opportunities can emerge when a market fails to fall meaningfully, despite ostensibly negative news.
Bitcoin Technical Analysis – BTC/USD 4-Hour Chart
Source: TradingView, StoneX
As the chart above shows, Bitcoin dropped to a fresh 4-week low at $80K earlier today, but buyers have stepped in en masse to push the cryptocurrency back above $82K as we go to press. In addition to its psychological significance, the $80K level also coincides with the rising 50-day EMA, strengthening the potential support in that area.
For now, Bitcoin remains within its October range between $80K and $87K, but if the fundamental news can shift back in a positive (or even less negative) direction, the cryptocurrency could retest its 9-month highs near $88K in short order. Only a confirmed break below the $80K would shift the near-term technical outlook to the downside for a potential test of the September lows near $75K.
-- Written by Matt Weller, Global Head of Research
Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX
