After the worst period of persistent net outflows for the U.S. Spot Bitcoin ETFs since they were launched in January 2024, a 4-day run of net inflows has potentially started to reverse this trend. Is this another sign that Bitcoin is on the way back?
Front-running tariffs, and other factors, may have marked an economic bottom
It can arguably be said that nothing particularly bad came out of Wednesday’s FOMC meeting. The Federal Reserve chairman was unable to say with any certainty where the economy was going, besides forecasting lower growth, higher inflation, and higher unemployment.
None of these are anything to write home about, but the market was generally expecting this, and given the huge uncertainty of the Trump tariffs, the Federal Reserve couldn’t be blamed for not giving a more accurate prediction of the market further out into 2025.
So, with the Trump tariffs priced in, and a lot of the recent poor economic data probably caused by front-running these tariffs, resulting in a heavier than normal trade deficit, things could now start to begin improving.
The two quarter point rate cuts, previously predicted for this year by the Federal Reserve, are still on the table. On top of this, Fed chairman Powell stated that the Fed’s balance sheet would be run off at a much slower rate, meaning that quantitative tightening is starting to release its choke hold on the market.
U.S. Spot Bitcoin ETFs experience worst ever sell-offs
From 10 February, through to 14 March, the U.S. Spot Bitcoin ETFs experienced their biggest sell-offs since they were launched. Apart from four small inflow days during this period, the selling grew to a crescendo on 25 February, when $1.01 billion, the biggest ever daily outflow, left the ETFs.
If one looks back over the entire 15-month history of these ETFs, the outflows have always generally corresponded with a fall in price, while the inverse has also been true. Therefore, this recent change back to net inflows, although certainly not yet definitive, may be one more signal that Bitcoin could be on its way back up.
Bitcoin in small local uptrend
Source: TradingView
The short-term chart for $BTC shows that a small uptrend is taking place. A series of higher highs and higher lows are currently being made, and this is within an ascending channel. It could be said that this channel is in fact a bear flag, which could be the case. If the price did break down, the measured move would take it to the lower of the horizontal support levels at $73,700.
That said, at least for now, the price is moving sideways within a range, and there is still a good chance that this local upward trend could continue, perhaps even to the top of the range at $91,000.
Hash Ribbons indicator signals capitulation
Source: TradingView
One of the top 10 indicators for Bitcoin is the Hash Ribbons. Especially on the higher time frames, this indicator is not in the habit of giving false signals. If we look at the entirety of the bull market so far, the Hash Ribbons has given three great buy signals. It might be argued that price can dip close after the buy signal, but, as can be seen, the bottom was in within a week or two of each signal.
Going back to the Hash Ribbon signal preceding the earliest one on the chart, the capitulation signal did flash, but given that the bear market bottom was still not in, the blue buy signal did not appear.
Regarding the current signal, it can be noted that the capitulation circle is there, and that the shadow of this is just starting to grow out to the side. This means that the capitulation phase is still ongoing, and there could be some more downside to come. It remains to be seen for how long this may continue, but if the buy signal does appear, stand by for a big surge in price action.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
