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Bitcoin Recovery Stalls as ETF Outflows and Technicals Signal Risk
- Bitcoin has reclaimed the US$110k mark after last week’s dip below US$108k, trading in a narrow range since hitting an all-time high of US$124,457 on 14 August.
- Markets are fully pricing in a Federal Reserve rate cut on September 17, with most expecting a 25-basis-point reduction despite concerns that much of this optimism is already priced in.
- US spot Bitcoin ETFs have experienced significant outflows, losing US$383 million over the past two trading days alone, though they still hold 6.1% of all available Bitcoin.
- Analysts suggest institutional profit-taking and muted ETF flows may limit Bitcoin’s ability to break above US$120k, despite the potential support from dovish Fed policy.
Most cryptocurrencies are trading sideways, with the largest asset – Bitcoin (BTC) – reclaiming the US$110k (AU$167.6k) mark after dipping below US$108k (AU$164.6k) last week. Aside from that dip, BTC has been trading in this narrow range since the all-time high of US$124,457 (AU$189,681) on 14 August.
Crypto analyst Michaël van de Poppe mused that this “new higher low” likely acts as support level and could indicate a rally to higher levels and even a revival of the bull run.
Will the US Fed Finally Cut Rates?
Meanwhile, as the Federal Reserve’s September 17 rate decision approaches, markets are fully pricing in a cut, with most expecting a 25-basis-point move and a smaller chance of a larger 50-point reduction.
Rachael Lucas, analyst at BTC Markets, said expectations of a more dovish Fed are already largely priced in.
However, the market had already priced in some degree of policy easing. At the same time, we’re seeing profit-taking by institutional desks, while ETF flows remain relatively flat.
Rachael Lucas, BTC Markets Kronos Research CIO Vincent Liu cautioned that even with a cut, persistent inflation and muted ETF flows may limit risk appetite, making a push beyond the US$120k (AU$182k) mark difficult without a broader expansion of liquidity.
US ETFs Post Losses
This all comes at a time when the US spot Bitcoin exchange-traded funds (ETFs) are continuing to see outflows. Out of the past five trading days, three closed in the red.
Over the past two trading days alone, US$383 million (AU$583.4 million) left the funds.
Despite the sell-off, the US ETFs still hold 6.1% of all ever-available BTC. These 1.29 million Bitcoin are currently valued at US$143.8 billion (AU$219 billion).
BlackRock’s iShares Bitcoin Trust (IBIT) remains the largest holder, with over 750,000 BTC, valued at US$83 billion (AU$126 billion).
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Related: Australian SMSF Crypto Holdings Slip 4% Despite Bitcoin Surge
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
