Bitcoin Price Risks More Downside as ETF Outflows and Bond Yields Rise

Key Insights

• Bitcoin price fell for a fourth straight session and slipped to its lowest level since June 11.
• Rising U.S. Treasury yields continued to pressure risk assets after the latest Federal Reserve decision.
• Spot Bitcoin ETFs recorded another week of net outflows, extending a multi-week withdrawal streak.

Bitcoin price extended its decline this week, falling to $62,600 and reaching its lowest level since June 11. The cryptocurrency has now dropped sharply from its yearly peak of $97,797 as investor sentiment weakened across spot and derivatives markets.

The latest decline came as U.S. Treasury yields moved higher following the Federal Reserve’s latest policy decision. At the same time, spot Bitcoin exchange-traded funds (ETFs) continued recording net outflows, signaling softer institutional demand.

Bitcoin Price Falling as US Bond Yields Jump

BTC token has been in a strong sell-off this year as demand in the ETF, spot, and futures markets waned.

This retreat may continue in the near term as US bond yields continue rising after this week’s Federal Reserve interest rate decision. Data shows that the two-year yield jumped to 4.219% from the year-to-date low of 3.373%.

Similarly, the five-year bond yield jumped to 4.23%, a few points below the year-to-date high of 4.35%. The 10-year yield has also soared to 4.455%.

These bond yields have continued rising this year because of the ongoing US inflation increase and the hawkish Federal Reserve interest rate decision.

The most recent data showed that the headline CPI rose to 4.2% in May, while the PPI jumped to 6%. Inflation has remained above the 2% target in the past five years, putting pressure on the bank.

This explains why nine Federal Reserve officials hinted that they will support hiking interest rates later this year. Bitcoin and other top cryptocurrencies normally underperform the market in periods of high inflation and interest rates.

Bitcoin ETF Outflows Have Continued This Year

Meanwhile, there are signs that demand for Bitcoin has continued to wane in the past few months. Data shows that spot Bitcoin ETFs shed over $90 million on Thursday as the coin retreated below $65,000.

These funds have now shed over $226 million this week, the sixth consecutive week in the red. In total, these funds have now shed over $5.93 billion in assets in the last five consecutive weeks.

The funds have had cumulative inflows of $53.4 billion and now hold about $78 billion in assets. BlackRock’s IBIT ETF now holds over $47 billion in assets, while Fidelity’s FBTC holds $11.3 billion.

The same trend is happening in the futures market. Data shows that the futures open interest slumped to $45 billion on Friday, down sharply from last year’s high of $90 billion. That is a sign that investors are no longer risking substantially as they did before. This open interest has slumped sharply after last year’s large liquidation event. Bitcoin whale purchasing has also plunged.

Bitcoin’s underperformance is also happening as the stock market boom gains steam. US stock indices like the Dow Jones, Nasdaq 100, and S&P 500 indices soared to a record high, with their ETF inflows continuing to soar.

Bitcoin Price Prediction: Technical Analysis

The four-hour chart shows that the BTC price has slumped from $82,776 on March 6 this year. It then fell to a low of $59,100 earlier this month and began to crawl back, reaching a high of $67,500.

The coin formed an ascending channel during the ongoing rebound. This channel is part of the bearish flag pattern, a common continuation sign in technical analysis. It has slumped below the 50-period and 100-period moving averages.

At the same time, the coin has slumped below the Ultimate Resistance of the Murrey Math Lines at $68,750.

Therefore, the coin’s path of least resistance is downwards, with the next important target to watch being the strong pivot and reversal level at $59,375. A drop below that level will point to more downside, potentially to the ultimate support of $56,250.

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