When Will Bitcoin’s Consolidation End?

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

When Will Bitcoin’s Consolidation End?

• Bitcoin consolidates between 94k to 98k
• Headwinds limit gains

– FTX distributions
– Hawkish Federal Reserve
– BTC ETF outflows

• Tailwinds could support a break higher

– Regulatory Backdrop & Texas BTC reserves
– Institutional demand

• Bitcoin technical analysis

continues to trade in a very tight range, consolidating between 94k and 98k over the past two weeks and between 91.5k and 105k over the past two months. The price briefly dipped to a low of 93.3k on Tuesday before quickly recovering back above 95k the same day. Today BTC trades at 96.6k as investors weigh up whether BTC/USD will break out or break down from the holding pattern. The weak sell-offs could favour a break to the upside.

Bitcoin Headwinds Limit Gains

1. FTX Distributions

The price dipped to 93.3k, a two-week low, on Tuesday news that default exchange FTX began paying creditors owed $50,000 or less. FTX also announced that it will start repayments to customers with accounts above $50,000 as of May 30.

According to Arkham data, this first wave of distributions represented $1.2 billion in value. This is just the start of the payout process, which is expected to total $16.5 billion.

2. Hawkish Federal Reserve

This is not the only headwind that Bitcoin is facing. A more hawkish stance from the Federal Reserve has also limited BTC’s upside. The FOMC minutes released on Wednesday supported the view that the Fed is in no rush to cut rates until inflation improves. The minutes showed policymakers acknowledging the strong state of the labor market and the need for more progress on inflation before further rate cuts were necessary.

3. Trump Trade Tariffs

The prospect of additional trade tariffs has been another limiting factor. Trump threatened a further 25% trade tariffs on automobiles, semiconductors, and pharmaceuticals. This latest threat follows 25% tariffs on all steel and aluminium imports into the US. The prospect of additional trade tariffs, which could increase inflationary pressure and slow global growth, is preventing Bitcoin bulls from pushing higher.

4. BTC ETF Outflows

Capital inflows also highlight the slowdown in the Bitcoin rally. Bitcoin spot ETFs saw $585.6 million in outflows last week, ending a six-week run of inflows. BTC ETF inflows must ramp up for BTC to break higher.

Bitcoin Tailwinds Could Support a Break Higher

1. Regulatory Backdrop & Texas Bitcoin Reserve

Bitcoin headwinds offset several tailwinds, including a more favorable regulatory backdrop amid changes at the SEC and news that Texas is pushing through new legislation that would permit part of its strategic reserve to be held in Bitcoin. Should the proposal pass, the current $500 million annual cap on purchases would be removed, potentially setting a precedent and driving significant demand. This may be a first step towards a Bitcoin Strategic National Reserve. According to the playmaker, there is a 43% probability of a national Bitcoin reserve being created.

2. Institutional Demand

Meanwhile, recent 13F filings have also been sending positive signals. The filings show that the type of Bitcoin buyer is evolving from retail and hedge funds to banks and sovereign funds.

Filings indicate that Goldman Sachs has increased its cryptocurrency exposure by investing $2 billion in Bitcoin ETFs and related options in Q4 2024. Meanwhile, Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, disclosed a significant Bitcoin ETF holding, making it the 7th largest shareholder in BlackRock’s Bitcoin ETF (NASDAQ:). According to its 13F filing, Mubadala invested $436.9 million in BlackRock’s Bitcoin ETF last quarter, underscoring its digital ambitions.

The scale of these institutions’ investments marks a turning point in institutional currency adoption, as traditional banks and sovereign funds find regulated ways to gain exposure to digital assets. This evolution could support the Bitcoin price longer term.

Bitcoin Technical Analysis

Bitcoin has been consolidating between 94k and 98k since early February. The RSI is also neutral. This holding pattern lends itself to a breakout trade. However, the weak sell-offs could favour a break to the upside.

Buyers will look to rise above the 50 SMA at 98k and 100k, the psychological level to extend gains towards 105k and 109.5k for fresh record highs.

On the downside, sellers will need to break meaningfully below 94k and 91.5k to extend a move lower towards 85k.

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

Disclaimer: The content provided here is for informational purposes only and is not intended as personal investment advice. Past performance is not a reliable indicator of future results. The financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. Virtual assets are inherently volatile and subject to significant value fluctuations, which could result in substantial gains or losses. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money. PrimeXBT does not accept clients from Restricted Jurisdictions as indicated on its website.

This is the hidden content, please

• Sign In
• or
• Sign Up

#Bitcoins #Consolidation

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up