Bitcoin’s Wild Ride: $1 Billion Outflows and a Hawkish FOMC

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Bitcoin (BTC), that enigmatic digital beast, is wobbling like a drunkard on a tightrope, clinging to the $111,980 support after a 3% plunge. 🥴

The BTC pullback persists, as if it were caught in a game of tug-of-war between weakening demand and profit-taking. Spot Exchange Traded Funds (ETFs) have hemorrhaged over $1.15 billion, leaving Bitcoin enthusiasts clutching their wallets in despair. 💸

Bitcoin Spot ETFs: A Five-Month Outflow Extravaganza 🚨

Bitcoin’s price correction over the weekend was as dramatic as a Moscow winter storm, dropping nearly 8% from its all-time high of $124,747 on August 14. The falling institutional demand, like a poorly rehearsed opera, fueled this price pullback. 🎭

SoSoValue data reveals that Bitcoin Spot ETFs have recorded a staggering $1.15 billion in outflows until Thursday, the highest since early March. If this outflow continues, BTC could slide further down the rabbit hole. 🐇

On-chain Data: Profit-taking Fuels BTC’s Downward Spiral 📉

CryptoQuant’s weekly report, delivered with the solemnity of a Kremlin decree, highlighted that slowing demand and profit-taking are the primary culprits behind BTC’s correction. 🕵️‍♂️

The graph below shows that BTC demand is weakening faster than a Soviet-era tractor. Bitcoin Apparent Demand has plummeted from its July peak of 174,000 BTC to a mere 59,000 BTC on Wednesday. 🚜

During the same period, institutional demand has also slowed, with 30-day ETF net purchases (red) standing at 11,000 BTC, their lowest since April 25. Strategy’s accumulation (grey) has nosedived from 171,000 BTC in November 2024 highs to 27,000 in the last 30 days, suggesting fading momentum. If demand continues to wane, Bitcoin could remain in a consolidation phase or slump further. 📉

Glassnode’s report adds fuel to the bearish fire. The graph below shows that Open Interest (OI) across Bitcoin futures contracts remains elevated at $67 billion, suggesting overheated leveraged conditions. Even moderate price movements could trigger a significant contraction in leveraged positions. 🔥

The report further explains that while liquidation volumes were triggered during this correction, with shorts reaching $72.8 million and longs hitting $99 million, they remained low compared to July’s volatile moves. This suggests recent contract closures were likely voluntary, not forced liquidations. 🤔

Bitcoin Slides After Hawkish FOMC Stance 🦅

On the macroeconomic front, the late-July Federal Open Market Committee (FOMC) meeting struck a hawkish tone. Policymakers expressed greater concern over persistent inflation than over the labor market, pressuring riskier assets like Bitcoin. 📉

This hawkish stance followed US Producer Price Index (PPI) data exceeding economists’ expectations, suggesting escalating inflation. BTC slid 1.58% last week, leaving traders cautious. 🧐

Some Signs of Optimism 🌞

Despite BTC’s correction, treasury companies like Metaplanet and Strategy added 1,185 BTC on Monday, buying at these price dips. 📈

CMB International Securities, a subsidiary of China Merchants Bank, announced the official launch of virtual asset trading in Hong Kong, supporting BTC, ETH, and USDT. This marks a milestone as the first Chinese bank-affiliated brokerage firm to carry out this business in compliance. 🌏

Additionally, US President Donald Trump’s plans for a trilateral meeting with Russia and Ukraine raise hopes for ending the protracted Russia-Ukraine war, potentially boosting risk-on sentiment and cryptocurrencies like Bitcoin. 🌍

Is BTC Out of the Woods? 🌲

BTC price has fallen over 8% from its record of $124,747 on August 14, closing below an ascending trendline and retesting its support level at $111,980 on Thursday. At the time of writing on Friday, it hovers around $113,200. 🕰️

If the $111,980 support holds and BTC recovers above its 50-day Exponential Moving Average (EMA) at $114,788, it could extend the recovery toward $116,000. 📈

However, the Relative Strength Index (RSI) reads 42, below its neutral value of 50, suggesting bearish momentum. For the recovery rally to be sustained, the RSI must move above its neutral level. 📉

However, if BTC continues its correction and closes below $111,980 support, it could extend the decline toward its 100-day EMA at $110,604. 📉

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2025-08-25 09:32