Cryptocurrency investors began the new week with renewed hopes as the Bitcoin price approached $72,800. However, the slight smiles on their faces could fade in a few hours. The latest data points to a potential decline in cryptocurrencies in the coming hours. So, what awaits us in the next few hours, and what is the reason for this pessimism?
Why Could Bitcoin Fall?
Data for Spot Bitcoin ETFs arrived on Monday, April 8. We have often seen volatility increase on days when there are dominant inflows or outflows. When inflows are strong, BTC rose, and conversely, when Asian investors start their day, declines accelerated. Similar movements are seen in the first hour when US markets open, and approximately 12 hours apart, these two periods offer opportunities for gains.
The opportunity for gains is related to the potential to predict the timing and direction of volatility. According to the latest data, there was a strong outflow on the GBTC side. Worse yet, we saw an unusually weak inflow from the Blackrock side.
- GBTC -$303.3 Million
- IBIT (BlackRock) +$21.3 Million
Although BITB saw an inflow of $40.3 million, likely from a few institutions, there is still a net outflow of approximately $230 million. We had not seen a net outflow since April 1. Even worse, we have not seen such a large net outflow since the drop on March 20. If Fidelity doesn’t surprise us with a net inflow of around $300 million, a decline could start within a few hours.
Cryptocurrency Market Forecast
Headline inflation is expected to come in at 3.4% (previous 3.2%) and core inflation at 3.7% (previous 3.8%). The weak decline in core inflation expectations and poor data from the first two months of 2024 could unsettle investors (including crypto traders) in risk markets as the time for the data release on Wednesday approaches.
Moreover, following the data release, Fed minutes will also be disclosed on the same day, and members are starting to express concern about inflation. Reading the ETF outflows and inflation data together, logic suggests that the BTC price should fall back below $69,000 in a few hours. However, no one can see the future, and predictions are not obligated to come true. Positive surprise news or investors moving to strong accumulation in spot markets could also drive the price in the opposite direction, potentially reaching $73,777.
