Bitcoin Faces Fifth Straight Weekly Decline as Spot ETF Outflows Surge, Fears of Drop Below $60,000

▲ Bitcoin plunge / ChatGPT-generated image ©

Bitcoin (BTC) is on the brink of a fifth consecutive weekly decline, weighed down by fading expectations of a June rate cut by the U.S. Federal Reserve and escalating geopolitical tensions. In particular, massive outflows from spot exchange-traded funds (ETFs) have deepened the supply-demand imbalance.

According to investment media outlet FXEmpire on Feb. 22 (local time), U.S. spot Bitcoin ETFs recorded total net outflows of $315.9 million for the week ending on the 20th, marking five straight weeks of capital withdrawals. BlackRock’s iShares Bitcoin Trust (IBIT) saw $303.5 million in outflows, while Fidelity’s Wise Origin Bitcoin Fund (FBTC) posted $19.6 million in outflows. This brought total net outflows for the year to $2.6 billion, with Bitcoin prices plunging 22.44% year-to-date.

The primary driver behind the withdrawals is the sharp deterioration in rate-cut expectations. According to the CME FedWatch Tool, the probability of a June rate cut fell from 68.6% to 53.5% following recent economic data releases. Depending on this week’s U.S. February consumer confidence index (expected to rise from 84.5 to 86.0) and weekly initial jobless claims (forecast to increase from 206,000 to 211,000), a more hawkish stance from the Fed could intensify short-term selling pressure on Bitcoin.

Additional downside risks include the Bank of Japan’s (BoJ) hawkish moves. If the BoJ raises its neutral rate from 1.5% to around 2% and proceeds with further hikes, the narrowing interest rate gap with the U.S. could trigger a large-scale unwind of yen carry trades, similar to mid-2024. At the same time, escalating geopolitical tensions between the United States and Iran pose another risk factor that could drag Bitcoin below $60,000 to its support level at $49,351.

However, signs of a potential rebound are also emerging. The Crypto Fear & Greed Index, a gauge of market sentiment, has fallen to 9, indicating extreme fear—historically a signal that a bottoming rebound may be imminent. Additionally, expectations for the passage of a cryptocurrency market structure bill in the U.S. Senate are providing strong support for a medium-term rally.

Technically, Bitcoin remains below its 50-day and 200-day exponential moving averages (EMA), reflecting a bearish trend. However, if it decisively breaks above the $70,000 resistance level, the downward structure would be invalidated, potentially paving the way for a medium-term climb toward $100,000 and, over the longer term of six to twelve months, a retest of the all-time high of $123,731, the outlet projected.

Disclaimer: This article is for investment reference only and the publisher is not responsible for any investment losses incurred based on it. The content should be interpreted solely for informational purposes.