Bitcoin Sinking Amid Persistent ETF Outflows: More Pain Ahead?

Apart from a brief rally up to $78K, the $BTC price is continuing to make its way lower. What is certainly a bearish factor weighing on price is the persistent outflow from the Spot Bitcoin ETFs. With the last 6 days resulting in negative outflows, what chance does Bitcoin have to buck this downtrend?

7th straight day of ETF outflows

Source: Coinglass

A total of just over 24K BTC leaving the U.S. Spot Bitcoin ETFs over the last 7 trading days does not instil a lot of confidence into Bitcoin investors. Will this have the effect of forcing the $BTC price down into the last stage of this bear market?

A pattern forming that could take $BTC up to $81K?

Source: TradingView

It doesn’t seem that long ago that the $BTC price was vying strongly to break out above the bear flag, a feat that would have been incredibly bullish had it succeeded. Instead, rejection was the final decision, and the price has been steadily moving lower ever since.

The price has flipped to the outside of the small descending channel, and probably the next move to be expected is for the price to lose touch with the bottom of the channel and perhaps speed up to the downside.

That said, price often does the unexpected, and there is actually a pattern forming that could turn the tide back in favour of the bulls. This is an inverse head and shoulders which is forming to the underside of the descending channel. If the $BTC price comes back up to touch the channel bottom trendline this completes the pattern. It just then remains to be seen if the pattern breaks to the upside or fails. The upside measured move would be to $81K which could coincide with the top of the small channel.

$BTC price back in lower half of bear flag

Source: TradingView

Looking at the current bear flag in the daily time frame the demarcation of the price action between the top and bottom of the flag can clearly be seen. The midpoint of the flag is having as much of an influence on the price action as the top and bottom trendlines of the flag.

The $BTC price is below the midpoint now, so it is going to take a decent spurt to the upside from the bulls in order to break through to the top half of the flag again. With the Stochastic RSI indicator lines looking as though they are going to roll over, the upside momentum signal is not there, at least on this time frame. Perhaps the 4-hour time frame could provide that momentum?

Fibonacci levels predict 2 potential bear market bottoms

Source: TradingView

Zooming right the way out into the monthly time frame may put your mind at rest if you are a long-term investor. Look at the Fibonacci lines for the entirety of this bull/bear cycle. When the $BTC price came down to that $60,000 level many analysts assumed it would be the bottom (it still may be). That said, this bottom did not quite tag the 0.618 Fibonacci level, which is surely the minimum retracement level for a full-scale bear market?

Is the price going to end up coming down to this level eventually? This would be well within the limits of a double bottom, and would appear to be a great place for the price to start on the next bull run, keeping in line with support levels from the previous bull market double top.

Or, is the price going to come all the way down to the 0.786 Fibonacci level? This lines up fairly closely with the $40K bottom that some analysts are favouring across social media.

The answer may well coincide with what happens to the monthly Stochastic RSI indicator lines. If they continue to rise and get above the 20.00 level, there would probably only be time for the price to perhaps dip quickly down to the 0.618 level, but if the lines stay at the bottom for a lengthy period, as happened for the entirety of 2022, then we could see a dip to $40K and the 0.786 - the deepest of the Fibonacci levels.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.