Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) began the new week bearish after recording losses over the weekend.
The leading cryptocurrency is now trading near its recent support level but market sentiment remains fragile due to the ongoing volatility.
Bitcoin has lost 10% of its value in the last seven days and could record further losses if the current support level doesn’t hold in the near term.
Fading institutional demand
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The primary catalyst behind Bitcoin’s bearish performance is the liquidity tightening from the Federal Reserve and the fading institutional demand for Bitcoin-related products.
Bitcoin dropped to a six-month low of $93k on Sunday, down 27% from the all-time high of $126k it reached in October.
Institutional demand has declined in recent months, with Bitcoin spot ETFs posting over $700 million in net outflows last week, marking a third consecutive week of withdrawals since the end of October.
Furthermore, on Thursday, it recorded an outflow of $869.86 million, the highest single-day negative flow since February 25.
With a massive selloff from institutional investors, Bitcoin could face further price correction in the near term if the trend persists.
The Fear and Greed Index currently stands at 17, nearing early March lows, suggesting a sharp shift toward extreme fear as investors brace for further downside movement.
According to CryptoQuant’s latest report, Bitcoin remains in an extremely bearish price as the price declines below $100k.
CryptoQuant’s Bull Score Index has declined from 80 on October 6, when BTC hit its all-time high, to now stand at 20, after BTC dipped below $100k.
Bitcoin has yet to recover since the October 10 liquidation event.
However, analysts are optimistic that Bitcoin’s price could turn around in the near term as the Fed is set to ease its liquidity tightening policy by December.
While speaking with The Block, BTC Markets Crypto Analyst Rachael Lucas said.
Technically, this puts us in a bear market, but context matters; the last cycle saw a 55% drawdown before a run-up to a cycle high in November 2021. We’re likely at the tail end of this bear phase, yet the macro backdrop is very different: the US government has reopened, interest rate cuts are pending, and the Fed is set to end quantitative tightening in December.
Bitcoin price finds support above $94k
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The BTC/USD 4-hour chart is bearish and efficient as Bitcoin has lost 2% of its value over the weekend.
At press time, Bitcoin is trading above $95,600 per coin.
If Bitcoin holds the support around the 61.8% Fibonacci retracement level at $94,253, it could rally higher in the near term and hit the $106k level over the next few hours or days.
The 4-hour RSI of 42 shows that Bitcoin is recovering after entering the oversold territory during the weekend, suggesting a fading bearish momentum.
The RSI needs to move above the neutral level for Bitcoin’s recovery to gain momentum.
However, failure to defend the $94,253 support level could see Bitcoin extend its decline towards the next support region at $90k.