Crypto traders have started to become a bit worried as the tail wind which was very much keeping rally going has certainly fainted and traders are scratching their heads with they look at recent headlines about the on-going outflows from Bitcoin ETF- a facto which provided hope to many that we are just in an early days of crypto rally. Here is more on this

Background 

Bitcoin, the king of cryptocurrencies, or, as a few people say, the religion of the crypto space, has started to lose momentum as the halving event is over. Going into the Bitcoin halving event, there was a lot of optimism among traders and investors that the event would push the prices steeply higher and we would see another jaw-dropping record high. We did see the bitcoin price reaching a record high, but it was well away from what we can even closely classify as a jaw-dropping record high, as the BTC price only moved slightly above its previous record of 69K to a new record high of $73,808. Speculators and investors were thinking that the current Bitcoin halving event would at least push the price of digital gold to at least $100,000. However, here we are, and the current price for BTC is very challenging given the current support level of $60K, and threats are real that we may actually see a move to the downside rather than to the upside. However, it is always better to consider a glass-half-full approach than anything else.

Bright days may be ahead.

The reason that I am optimistic about the bitcoin price is that there are a number of factors that investors haven’t paid too much attention to, as the whole focus has been solely on the bitcoin ETFs and the bitcoin halving event. The Bitcoin ETF event, which once was a huge plus, is not creating more and more negative sentiment as we continue to hear headlines like the worst outflow of funds. If we look at the total outflow from the Bitcoin ETF, it stands at 244.49 million. However, again, an important thing to consider here is the correlation of the Bitcoin ETF outflow with the Bitcoin price. This relationship isn’t as strong as it used to be, and what we mean by that is that if we look at Grayscale’s Bitcoin ETF GBTC, it experienced an outflow of 417 million last week, but if we look at the weekly price action for Bitcoin, it actually closed well above the lows of the week—still in the negative territory but in a better position than it was during that week.

Positivity 

Going forward, we think that the most important thing for the bitcoin price is going to be the US elections, and it is because of this reason that many think that the rally for the bitcoin price isn’t over. The US elections are due in November, and as both candidates are surely going to do one thing, which would be to increase the US debt, this would make the traders love Bitcoin as it serves as a hedge against the devaluation of the US dollar. Finally, investors also believe that the outflow in the Bitcoin ETFs that we have seen will change in a few weeks as the world continues to become a more complex place due to the massive increase in defence spending—the US, the UK, and the EU have all increased and talked about amplifying their numbers. And in times of geopolitical tensions, bitcoin has a place as a safe haven asset—although it is important to mention that during the past two occasions when Russia attacked Ukraine and when the Israil and Iran conflict happened, the immediate action in the bitcoin price was to the downside.

Bitcoin's Price Action 

In terms of the price action, the price has dropped below the 50-day SMA, which shows that weakness is here for the current, but the fact that the price is trading above the 100-day SMA confirms that the uptrend is still intact. The important levels are shown on the chart below.

Bitcoin Price Chart by XTB