Bitcoin’s price remains under pressure as key market indicators suggest a bearish trend, with the fear and greed index slipping into the fear zone and the Market Value to Realized Value (MVRV) Z-score hitting a three-month low.
Investors appear to be on the sidelines, awaiting the next market catalyst. Data from SoSoValue indicates that demand for spot Bitcoin exchange-traded funds (ETFs) in the U.S. has weakened, with net outflows exceeding $650 million over the past four days.
ETF Outflows and Market Volatility
On-chain analyst Ali Martinez highlighted the significance of this trend, stating, “When spot Bitcoin ETFs offload BTC, it means they are selling Bitcoin from their holdings, which can create downward price pressure, signal investor outflows, and increase market volatility.”
He added that redemptions, institutional portfolio shifts, and fund rebalancing could be driving the sell-offs. If multiple ETFs liquidate holdings simultaneously, price swings may be amplified, particularly during low-liquidity periods. Additionally, arbitrage traders could exploit price discrepancies between ETFs and Bitcoin’s spot market.
Macroeconomic and Geopolitical Uncertainty
Bitcoin’s stagnation is also linked to ongoing geopolitical tensions and concerns over prolonged high-interest rates. Investors fear that President Donald Trump’s proposed tariffs could ignite a trade war, leading to further market volatility and inflationary pressures.
Recent inflation data supports these concerns. The latest U.S. Consumer Price Index (CPI) report showed headline inflation rising from 2.9% in December to 3% in January, with core CPI increasing from 3.2% to 3.3%.
Historically, Bitcoin and other risk-sensitive assets tend to underperform in a hawkish monetary environment. Federal Reserve Chair Jerome Powell recently testified before Congress, signaling that interest rates would remain high until inflation shows a sustained decline.
Key Market Indicators Signal Bearish Sentiment
The closely watched fear and greed index has dropped from an extreme greed level of 90 in 2024 to a fear level of 40. Meanwhile, the MVRV Z-score, an important valuation metric, has declined to 2.49 from its year-to-date high of 3. A reading below 3.5 suggests that Bitcoin may be undervalued, though historical trends indicate that such declines often precede accumulation by institutional investors.
Technical indicators further reinforce a bearish outlook. Bitcoin’s price has remained below the psychological $100,000 mark, trading in a tight range for the past two months. It has fallen below the 50-day Exponential Moving Average (EMA), a bearish signal, and formed a double-top pattern at $108,440.
As long as Bitcoin remains below this level, the bearish trend is likely to persist. A drop below the neckline support at $89,055 could lead to further declines, with the next major support level at $73,613. Conversely, a move above $108,440 would invalidate the double-top pattern, potentially signaling a bullish reversal.
Ethereum and Regulatory Developments
Ethereum is currently trading at $2,693.91, down 0.3% on the day. The broader crypto industry has been buoyed by an apparent shift toward pro-crypto policies in the U.S. The Biden administration has introduced regulatory measures aimed at fostering clarity, while the Securities and Exchange Commission (SEC) has pledged to scale back enforcement actions against crypto firms.
Under Trump’s administration, the SEC also introduced SAB 122, a rule that is expected to facilitate crypto adoption. Additionally, there is growing momentum for a Bitcoin-friendly regulatory environment.
Crypto Market Vulnerable to Macroeconomic Shocks
Despite these positive regulatory developments, the past week has underscored how vulnerable cryptocurrencies remain to broader economic forces. Coinglass data shows that the crypto market lost $2 billion in value on the day President Trump announced new tariffs on China, Canada, and Mexico.
While long-term fundamentals may remain intact, Bitcoin’s near-term trajectory will depend on institutional demand, macroeconomic policies, and market liquidity. Traders and investors will closely watch for signals of a potential reversal or deeper downturn in the weeks ahead.
