Simply put
- Bitcoin has seen a 28% drop from its October peak and is nearing critical cost-based thresholds as weekly ETF investments decline.
- The U.S. Spot Bitcoin ETF now holds assets worth $117.67 billion, which is roughly 6.55% of the total supply, positioning it as a crucial support area.
- Market observers are keen to see if renewed ETF interest and the Fed’s upcoming rate cut will help stabilize prices.
U.S. Bitcoin exchange-traded funds (ETFs) continue to acquire significant amounts of the cryptocurrency, despite its price hovering slightly above $90,000.
Since February of last year, this demand has restricted ETFs from dropping markedly close to their break-even points, as indicated by Glassnode data.
In the past, significant price corrections—30% or more—tended to find support around their cost basis, particularly during two periods in early 2024 and early 2025. Notably, both times coincided with negative weekly ETF net inflows.
A similar situation appears to be forming now.
Bitcoin has decreased by 28% from its October high of $126,000, nearing the ETF cost basis level of $83,000. Weekly net inflows have also been negative since early December.
As of today, Bitcoin slid 1.5% to $89,900, recovering from a low of about $84,600 on December 2.
U.S. ETFs currently maintain $117.67 billion in Bitcoin, representing approximately 6.55% of the total available supply, creating a structural bid that might act as significant support.
However, the crux of the issue is whether ETF demand will be strong enough to support prices around $83,000 and propel the market upward.
“Bitcoin is situated within a solid on-chain and ETF support cluster where historically, risks and rewards tend to favor price increases,” stated BuyUCoin CEO Shivam Thakral. “A sustained recovery will hinge on new ETF inflows and market stabilization in the next week or two.”
All attention is currently on Wednesday’s FOMC meeting, where a quarter-point rate cut is almost certainly expected, according to CME’s FedWatch tool.
The major concern is whether the rate cut indicates a true easing trend or if it reflects a misstep in policy—particularly since inflation, especially in the service sector, remains stubbornly above the Fed’s target of 2%.
“If you check the federal funds futures today, the market expects a rate cut on Wednesday, but another cut might not come until June,” remarked Mark Pilipchuk, CMO at Kraken’s CF Benchmarks.
“We believe there could be potential for gains if the Fed hints at more rate cuts prior to its June meeting. This possibility increases if labor market conditions continue to soften and inflation stays within the 2% to 3% range.”
Thakral shared a similar optimistic perspective, suggesting that a “growth-supportive rate cut” could reinforce the historical pattern of Bitcoin rebounding at its ETF cost basis, effectively “boosting the chance of a recovery.”
Yet, he warned that the likelihood of a rebound could diminish if the Fed’s future guidance shifts towards a more hawkish stance.
