Simply put
- Bitcoin’s value dropped by roughly 4-5%, despite the U.S. spot ETF seeing more than $1.1 billion in inflows over a week.
- Soaring oil prices and ongoing inflation have made traders cautious about potential rate cuts.
- Attention is shifting toward the crucial support level of $70,000 as macroeconomic factors drive short-term fluctuations.
Bitcoin seems to be having a tough time holding its ground at elevated prices, even with institutional investors consistently investing in it. This raises questions about the increasing gulf between short-term macroeconomic pressures and sustained long-term demand.
The U.S.-listed Spot Bitcoin ETF recorded around $1.16 billion in inflows over seven consecutive sessions leading up to Tuesday.
However, on Wednesday, there was the first daily outflow, totaling approximately $129 million, according to Coinglass. Prices fell by about 4% as traders adjusted their expectations around interest rates.
It’s worth noting that ETF flow data is typically reported after the market closes, so it doesn’t accurately capture intraday shifts.
Nonetheless, the trend over the past week suggests that confidence remains strong behind the scenes. Rachel Lucas, a cryptocurrency analyst at BTC Markets, mentioned in an email that, “What makes this pullback different from previous corrections is that institutional money continues to flow into U.S.-listed Bitcoin ETFs.” She added that this ongoing demand indicates investors are starting to view Bitcoin as a long-term portfolio asset rather than just a speculative play.
The largest cryptocurrency experienced a decline of 4.2%, settling at $71,235 late Wednesday, down from a peak of nearly $75,600 earlier that week, although it’s up about 3.5% over the last month.
This pullback was prompted by traders reevaluating monetary policy prospects.
The Federal Reserve opted to keep interest rates steady at between 3.5% and 3.75%, yet indicated that inflation is likely to persist and raised its forecast for 2026 to around 2.7%.
Chairman Jerome Powell noted that while they expect “some progress” on inflation, it’s not quite what they anticipated, and they intend to maintain a strong long-term stance.
Ahead of the Federal Open Market Committee’s decision, markets were already showing signs of anxiety. A surprising uptick in the producer price index and rising oil prices added complications to the outlook for rate reductions.
Brent crude futures topped $110 a barrel as tensions escalated regarding attacks on energy infrastructure in the Middle East, including an assault by Iran on a Qatari facility related to global liquefied natural gas exports.
This situation has prompted traders to scale back their expectations for near-term easing, affecting both the stock and cryptocurrency markets. On Wednesday, the S&P 500 dropped 1.36%, while the Nasdaq slid 1.46%.
Currently, Bitcoin’s key support around $70,000 is under scrutiny, with potential further declines if forthcoming data—including unemployment claims and manufacturing surveys—heightens inflation worries.
For Thursday’s report, economists anticipate an uptick in jobless claims from 213,000 to 215,000, while the Philadelphia Fed’s manufacturing index is expected to dip from 16.3 to 8.4, suggesting a slowdown in regional factory activity, albeit still robust.
