- Bitcoin price is under downward pressure due to global recession fears and ETF outflows.
- Short-term Bitcoin holders feel the pain, while long-term investors remain profitable.
- A deeper pullback is possible, with Bitcoin currently 22% below its all-time high.
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Bitcoin prices have been struggling to regain momentum lately, with the Fear and Greed Index remaining in fear territory. Global markets’ fears of a potential recession are weighing on the cryptocurrency market.
Source: FinancialJuice
Bitcoin bulls have failed to break above $65,000, leading to constant selling pressure on the world’s largest cryptocurrency. Despite this, the average Bitcoin investor remains profitable, it’s the short-term holders who are currently facing difficulties.
According to Search on Glassnode Over the past three months, a notable change has been observed as downward pressure on prices has increased. It is therefore important to be attentive and assess the unrealized loss held by investors in order to assess the financial stress they are under.
From the perspective of the market as a whole, unrealized losses remain historically low. Total unrealized losses represent just 2.9% of Bitcoin’s market cap, which is historically low. This suggests that the overall investor remains relatively profitable, even in the face of continued price declines.
Source: Glassnode
There is also room for further downside considering that bitcoin is currently trading about 22% below its all-time high. In terms of historical bitcoin bull markets, this is a relatively shallow pullback that suggests the potential for a deeper pullback.
Bitcoin’s struggles this week are somewhat surprising given that markets have become even more aggressive on the rate cut front. US data this week saw the likelihood of a 50bp rate cut increase. This would theoretically lead to an increase in consumer disposable income and therefore should lead to optimism around the bitcoin price, but this has not materialized when looking at the bitcoin price.
ETF Flow
The increase in ETF outflows has also been a red flag of late. According to data from Arkham Intelligence released yesterday, 8 Bitcoin ETFs have seen outflows of approximately $287 million in a span of 24 hours. The only exception being BlackRock. This is the fifth consecutive day of outflows for Bitcoin ETFs and market participants may be starting to wonder… Is this a sign that investor confidence is waning?
Spot Ethereum ETFs saw a total net outflow of $47.4 million. Grayscale’s ETF (ETHE) saw an outflow of $52.3 million, but this was partly offset by Fidelity’s ETF (FETH), which saw an inflow of $4.9 million. The overall value of spot Ethereum ETFs is now $6.758 billion, according to the data.
BTC/USD Technical Analysis
Bitcoin is currently down about 3% today and could close below the important support level of 56,561. If that is the case, there is a chance that it will drop towards the 50,000 mark, which is an important psychological level.
What’s interesting is that this support level at 56,561 has been strong since early August, even after a market drop. To reach 50,000, Bitcoin needs to break support levels at 55,000 and 53,965.
On the other hand, if Bitcoin attempts to climb higher, it must first break above 58,500 before aiming for 60,000.
Bitcoin (BTC/USD) Daily Chart, September 5, 2024
Source: TradingView.com (click to enlarge)
Support
Resistance
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He has spent the last three years in an analyst role, honing his skills in various financial areas including technical analysis, economic data interpretation, price action strategies and analysis of geopolitical impacts on global markets. Currently, Zain is progressing towards his Financial Markets and Securities Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he completed modules on Fixed Income Fundamentals, Portfolio Management Fundamentals, Equity Market Fundamentals, Introduction to Financial Markets and Derivatives Fundamentals.
He is also a regular guest on radio and television programmes in South Africa, where he provides insights into global markets and the economy. In addition, he has contributed to the development of a course on financial markets approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.
