Key Points
- Bitcoin’s price stagnates as investors wait for the next catalyst and the fear and greed index remains neutral.
- Bitcoin’s outlook turns bearish as it drops below $100,000 and the double-top level of $108,440.
Bitcoin’s value is experiencing a period of consolidation. The market’s fear and greed index is at a neutral point, and the Z score of the market value to realized value has hit a three-month low.
The most significant cryptocurrency by volume, Bitcoin, is currently fluctuating within a narrow range. As of the last check on Saturday, the price was around $97,600, a slight increase of 1.2%.
Stagnation in Bitcoin’s Price
This price stagnation is occurring as investors hold back, waiting for the next market catalyst. Data from SoSoValue indicates that American investors’ interest in spot Bitcoin ETFs has reduced.
These funds have experienced net outflows exceeding $650 million in the past four days. On-chain analyst Ali Martinez noted this trend on Saturday.
When spot Bitcoin ETFs sell off BTC, it implies that they are disposing of Bitcoin from their holdings. This can result in downward price pressure, indicate investor outflows, and cause an increase in market volatility.
Sales are likely driven by redemptions, institutional portfolio shifts, or fund rebalancing. If several ETFs sell at the same time, it can exacerbate price fluctuations, particularly during periods of low liquidity.
Moreover, arbitrage traders might take advantage of price discrepancies between ETF prices and Bitcoin’s spot price.
The Current Market Situation
Bitcoin’s stagnation can be attributed to persistent geopolitical risks and the potential for prolonged high interest rates. Investors are concerned that President Donald Trump’s tariffs might trigger a trade war and cause market volatility.
This situation could also lead to increased inflation as companies raise their prices in the U.S. Recent inflation data revealed that the headline consumer inflation data rose from 2.9% in December to 3% in January, while the core CPI increased from 3.2% to 3.3%.
Bitcoin and other high-risk assets underperform when the Federal Reserve adopts a hawkish stance. This week, Fed Chair Jerome Powell hinted in his Congress testimony that the central bank would maintain its position until inflation begins to decrease.
The fear and greed index, closely monitored by investors, has fallen from the extreme greed level of 90 in 2024 to the fear level of 40.
Further, the Z score of the MVRV (Market Value to Realized Value) indicator has decreased to 2.49, down from the year-to-date high of 3. The MVRV indicator is a widely used tool to determine a crypto coin’s valuation by subtracting the realized market value from the circulating market value and then standardizing it. An MVRV figure of less than 3.5 suggests that a crypto coin is undervalued.
Historically, a decline in the fear and greed index, MVRV, and futures open interest indicates potential accumulation by savvy investors.
Technical Analysis of BTC Price
The daily chart shows that Bitcoin’s price has remained under $100,000 in recent days and has been in a tight range for the past two months.
Bitcoin has fallen below the 50-day Exponential Moving Average, a bearish sign. It has also formed a double-top chart pattern at $108,440.
Therefore, Bitcoin’s outlook is bearish as long as it remains below the double-top level. This bearish outlook will be invalidated if it rises above $108,440, which would negate the double-top point.
A drop below the neckline point at $89,055 will suggest further downside, with the next support level at $73,613.
Meanwhile, Ethereum is currently trading at $2,693.91, a decrease of 0.3%.
