Bitcoin Pulls Back to $77,530 as ETF Outflows Return and Fed Rate Hike Odds Climb
Key Takeaways
- •Bitcoin slipped from this week's high of $81,331 to $77,530 as investors took profits after the rally became overextended.
- •US spot Bitcoin ETFs recorded more than $201 million in outflows, ending a stretch of inflows that had supported demand.
- •Kevin Warsh's hawkish comments at Jackson Hole lifted the odds of a December Fed rate hike to above 68% on Polymarket and Kalshi.
- •The latest US PCE data showed headline and core inflation rising by more than 3%, still above the Federal Reserve's 2.0% target.
- •Bitcoin's chart shows both a bearish engulfing pattern and a golden cross, suggesting possible near-term volatility despite the broader uptrend.
Key Insights
Bitcoin price has dropped to $77,530 as the recent rally stalled.
Kevin Warsh maintained a highly hawkish stance at Jackson Hole.
Odds of Federal Reserve rate hikes jumped on Polymarket.
Bitcoin pulled back to $77,530 on Saturday, down from this week's high of $81,331. The retreat came after the cryptocurrency became highly overbought, prompting more investors to begin booking profits.
The pullback also coincided with ETF outflows that followed the first statement from Kevin Warsh at the Jackson Hole Symposium, the Federal Reserve's annual economic policy conference held in Wyoming, where central bankers signal upcoming policy direction.
Bitcoin ETF Inflows Stall
BTC price dropped significantly as investors reacted to the first ETF outflows in over a week. Data shows that ETFs shed over $201 million. That ended a prolonged period of inflows that had added millions of dollars.
ARK's ARKB ETF shed over $114 million in assets, while VanEck's HODL lost $13 million. BlackRock's IBIT shed over $33 million, and Bitwise's BITB lost $49 million on Friday.
Even so, this has been the best month for Bitcoin ETFs, with spot inflows rising by over $3.31 billion. These funds added over $172 million in assets last month. In total, the funds have accumulated over $54 billion in cumulative net inflows and now hold $97 billion in assets.
Spot Bitcoin ETFs, first approved by US regulators in January 2024, have become a key conduit for institutional exposure to Bitcoin, which is why their daily flow data is now closely watched as a gauge of broader demand.
Kevin Warsh Delivered a Hawkish Statement
Spot Bitcoin ETF outflows rose as investors reacted to the first statement by Kevin Warsh at the Jackson Hole Symposium.
He maintained that inflation remained stubbornly high, which may push the Fed to act. As a result, Polymarket and Kalshi data showed that odds of the Fed hiking interest rates in December jumped to over 68%.
The latest Personal Consumption Expenditures (PCE) data published by the US confirmed the gradual rise in these odds. The report indicated that both headline and core PCE rose by over 3% last month, remaining above the Fed's target of 2.0%.
Rising expectations for a Fed rate hike also explain why other assets dropped on Friday. Gold fell to $4,453 from this week's high of $4,699, while the S&P 500 Index dropped by 25 basis points to 7,711 points. The tech-heavy Nasdaq 100 Index also declined by over 100 points.
Bitcoin and other risky assets normally underperform the market whenever the Fed is hiking interest rates or signaling that it will, since higher rates raise borrowing costs and reduce the appeal of assets without cash flows. In this regard, the next key macro catalyst to watch will be US nonfarm payroll (NFP) data, which will provide more color on the state of the economy.
Meanwhile, from a policy standpoint, things are not going well, with the odds that the US will pass the CLARITY Act this year falling. According to PolyMarket, odds of the bill becoming law this year dropped to 14%.
The main reason is that Democrats have maintained they will oppose any law that lacks ethical measures. This would prevent President Trump from launching tokens. The CLARITY Act is a proposed bill aimed at clarifying how digital assets are regulated in the US, a framework the crypto industry has pushed for as a way to reduce regulatory uncertainty.
Bitcoin Price Prediction: Technical Analysis
The daily chart shows that BTC price made a strong bullish breakout, reaching its highest level in months. It peaked at $81,331, a notable level since it was the highest swing in May this year. This means Bitcoin has encountered a substantial resistance level.
The coin has also formed a bearish engulfing pattern, a major bearish reversal sign in technical analysis. This pattern often leads to a bearish reversal over time.
On the positive side, Bitcoin has formed a golden cross pattern, with the 50-day and 200-day Weighted Moving Averages (WMA) crossing. This pattern normally suggests that bulls have prevailed.
Therefore, the coin may see some substantial volatility in the near term and then resume the uptrend. If this happens, Bitcoin may jump to over $90,000 in the coming weeks or months.
