Bitcoin (BTC) Outlook: Bearish Amid Fed Hawkishness and Stagflation Fears

Bitcoin (BTC) faces a third weekly loss in four weeks as Fed Chair Powell cooled bets on a December rate cut. Fed Chair Powell’s concerns about inflation raised fears of stagflation, weighing on demand for BTC and BTC-spot ETFs. US BTC-spot ETF issuers reported weekly net outflows.

Losses in the final week of October ended a disappointing month, with investors having tagged it Uptober. A hawkish Fed policy outlook and slow progress on crypto-friendly legislation on Capitol Hill weighed on demand for crypto assets.

While US-China trade developments provided modest support, BTC ended October down 4.02% at $109,475. Crucially, monthly net inflows helped mitigate deeper losses but didn’t prevent the monthly decline.

US BTC-Spot ETF Outflows Push Bitcoin Below $110,000

The US BTC-spot ETF market registered net outflows of $799 million in the reporting week ending October 31. Weekly outflows pushed BTC to a weekly low of $106,326. Despite reversing the previous week’s $446.6 million in net inflows, spot ETF issuers reported monthly net inflows of $3.43 billion in October, cushioning the downside.

According to Farside Investors, key flows for the reporting week ending October 31 included:

• BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) saw net outflows of $403.4 million.
• Fidelity Wise Origin Bitcoin Fund (FBTC) had net outflows of $155.9 million.
• ARK 21Shares Bitcoin ETF (ARKB) and Bitwise Bitcoin ETF (BITB) reported combined net outflows of $155.5 million.
• In total, seven ETF issuers reported weekly net outflows.

ETF flows continue to influence BTC’s supply-demand balance, leaving BTC down 4.04% in the week ending November 2. Nevertheless, monthly inflows continued to support a bullish price outlook.

HODL15Capital commented on supply-demand trends, stating:

“US Bitcoin ETFs purchased 25,674 Bitcoin in October (vs. 13,500 BTC mined).”

While ETF issuers tilted the supply-demand balance in BTC’s favor, whales offloaded BTC. Market intelligence platform Santiment stated:

“Key stakeholders with 10-10k BTC hold 13.68 million BTC, totalling 68.62% of all Bitcoin. Going into the last all-time high, they accumulated ~110,010 coins between Aug. 22 and Oct. 12. However, they have dumped ~23,200 coins since.”

Key Week Ahead: Capitol Hill, US Data, and the Fed in Focus

The coming week could shift sentiment and demand for US BTC-spot ETFs. A continued US government shutdown, weak US economic indicators, and a hawkish Fed may fuel stagflation fears. Rising stagflation risks could weigh on risk assets such as BTC.

Conversely, a US Senate vote, passing a stopgap funding bill, could ease stagflation risks, shifting focus to the data and Fed speakers. A weaker labor market and dovish Fed rhetoric could boost BTC demand and expectations for Fed rate cuts, potentially driving higher private consumption.

Why the US Government Shutdown Matters to Traders

JPMorgan economist Michael Feroli remarked on the potential economic impact of the shutdown, stating:

“Each week, a shutdown subtracts about 0.1% from annualized GDP growth via reduced government activity. There could be a sentiment channel as well if the duration of the shutdown enters uncharted territory.”

Feroli added that layoffs and actual job losses could intensify risks to the labor market and consumer spending, which accounts for roughly 65% of US GDP.

Notably, the USDA, which oversees the Supplemental Nutrition Assistance Program (SNAP), will run out of funds, leaving over 40 million Americans without food assistance, an economic headwind.

Bitcoin’s retreat weighed on demand for Ethereum (ETH).

ETH Drops Below $3,750: Spot-ETH Outflows Weigh on Sentiment

While BTC’s losses weighed on cryptocurrencies, ETH-spot ETF issuers reported net inflows of $19.3 million in the reporting week ending October 31. Crucially, ETH-spot ETF issuers snapped a two-week outflow streak, cushioning ETH’s downside.

Nevertheless, recent price trends underscored BTC’s influence on the broader market. ETH has fallen 6.56% this week.

Explore our ETF flow deep-dive to see which tokens are winning the most capital.

Key Drivers for BTC Price Outlook

Considering BTC’s influence on broader market sentiment, several key events will drive BTC’s near-term outlook:

• US Senate votes on stopgap funding bills.
• US economic data.
• FOMC members’ speeches.
• Legislative developments, including the Market Structure Bill’s progress on Capitol Hill.
• US BTC-spot ETF flow trends.

BTC Price Scenarios:

• Bullish Scenario: A US government reopening, bipartisan support for the Market Structure Bill, dovish Fed rhetoric, softer US labor market data, and ETF inflows. These factors could send BTC toward $125,000.
• Bearish Scenario: US government shutdown continues, rising risks of US stagflation, legislative setbacks, hawkish Fed commentary, or ETF outflows. These factors could push BTC toward $100,000.

Technical Analysis

Bitcoin Analysis

BTC trades below the 50-day Exponential Moving Average (EMA), while holding above the 200-day EMA. The EMAs signal a bearish near-term but bullish longer-term bias.

• Upside Target: A break above the 50-day EMA could pave the way toward $115,000. A sustained move through $115,000 may open the door to retesting the $125,761 all-time high.
• On the downside, a drop below the 200-day EMA could bring the October 17 low of $103,576 into play. If breached, $100,000 would be the next key support level.

Track BTC and ETH market trends with our real-time data and insights here.

Ethereum ETF Flows and Key Support and Resistance Levels

Turning to Ethereum (ETH), ETH also trades below the 50-day EMA, while holding above the 200-day EMA. The EMAs indicate a bearish near-term outlook but a bullish longer-term bias.

• Upside Target: A break above $4,000 could bring the 50-day EMA and the $4,085 resistance level into play. A sustained move through the 50-day EMA could pave the way toward the $4,500 resistance level.
• On the downside, a break below $3,750 may enable the bears to target the 200-day EMA. If breached, the 200-day EMA and $3,563 would be the next key support levels.

Stay informed on BTC and ETH trends by monitoring macroeconomic developments, ETF flows, and technical indicators here.