Bitcoin Price At Risk As Fed Risk Converge With ETF Outflows And Weak Technicals

Bitcoin (CRYPTO: BTC) price dropped below the important support of $75,000 before paring some of those losses. The coin is facing numerous risks, including the rising ETF outflows, weak technicals, and the rising odds that the Federal Reserve will hike interest rates this year.

Bitcoin Price Is Facing Major Headwinds

BTC, the biggest cryptocurrency, is facing some major risks. A crucial one is the fact that smart money investors are actively selling their holdings. Data shows that spot Bitcoin ETFs, led by the iShares Bitcoin ETF (NASDAQ:IBIT) had $105 million in outflows on Friday. IBIT and Fidelity's FBTC lost $68 million and $36 million, respectively.

Spot Bitcoin ETFs had over $1.2 billion in outflows this week, higher than the $1 billion they lost a week earlier. These outflows have now erased the $1.6 billion that the funds experienced in the first six trading days of this month. 

The ongoing Bitcoin ETF outflows is a sign that institutional and smart money investors are sceptical about it having more gains in the near term. 

One potential reason for the outflows is that US macro events have changed. For example, US inflation has continued rising, and analysts predict that the headline CPI will move from 3.8% in April to 4.2% in May. 

As a result, the Federal Reserve, even under Kevin Warsh, will opt to hike rates this year. This is a dramatic shift since market participants were predicting a rate cut earlier this year. 

At the same time, there are fears that President Donald Trump will launch a new attack against Iran. Such a move will push inflation higher and raise the possibility that the Fed will hike rates. These events explain why the Crypto Fear and Greed Index has moved to the fear zone of 35.

BTC Price Technicals Suggest More Downside Likely

The ongoing Bitcoin price retreat is in line with the prediction we made last week. That article pointed to some highly bearish patterns that the coin has been forming in the past few months.

Bitcoin has formed a rising wedge pattern, which is made up of two rising and converging trendlines. It has now moved below the lower side and even crossed the 50-day Exponential Moving Average. It is attempting to move below the 23.6% Fibonacci Retracement level. 

Therefore, the coin will likely keep falling as these risks remain. If this happens, it may drop to $70,000 and below. However, a move above the key resistance level at $80,000 will invalidate the bearish outlook.

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