Bitcoin Rally Stalls

If you were long Bitcoin into the March highs, it’s been a frustrating six months. The market has largely traded sideways since that point with price action framed by a broad, corrective bear channel. Volatility in institutional flows has become a defining feature of the market now, since ETFs were approved earlier this year. Inflows drive BTC higher while outflows pull price back down. Given the changeable Fed outlook over the last six months, the ongoing US elections uncertainty, risks linked to the Russia-Ukraine war and the war in the Middle East and a weakening China outlook, bulls have been left disappointed each time its looked as though the market was about to breakout higher.

ETF Outflows

A solid run higher off last week’s lows, driven by a lift in Trump’s perceived election chances and record ETF inflows, has been capped this week. BTC has reversed from highs while industry data points to a large $80 million net outflow from ETFs this week. Once again, bulls have been thwarted. For now, it seems that this choppy way of trading (rising on inflows, sinking on outflows) is likely to continue until we hit the US elections.

Elections Uncertainty

One view that BTC stands to gai post-election, regardless of who wins. The removal of political uncertainty alone is expected to provide a boost. However, should Trump win, as a pro-crypto candidate, the gains would likely be outsized compared to a Harris win. However, the Fed remains a key barrier also and if labour market data strengthens again and the Fed turns less dovish, this could cap any Trump-driven BTC rally near-term. As such there is plenty to monitor from a macro-standpoint in the next few weeks.

Technical Views

BTC

The rally in BTC has stalled for now into a test of the 69,355 highs. Price has dipped back inside the bear channel, suggesting the likelihood of a fresh reversal lower if we hold beneath. 65.025 will be next support to watch ahead of the deeper 60,695 level.