Bitcoin (BTC) Outlook: Dip Buyers Return as Fed Rate Cuts Fuel Rebound Hopes

US BTC-Spot ETF Market Hit by US-China Trade Tensions

Bitcoin (BTC) found much-needed support as dip buyers returned, snapping a four-day losing streak. BTC rose 0.72% on Saturday, October 18, partially reversing the previous day’s 1.57% loss to close at $107,327. Despite Saturday’s gain, BTC has fallen 6.16% in October.

The US government shutdown initially boosted demand for BTC. However, the prolonged shutdown, extending to 19 days on Saturday, will likely delay the Market Structure Bill’s passage. The lack of a clear regulatory framework could temper crypto demand.

Furthermore, BTC has faced intense selling pressure since the latest escalation in the US-China trade war. President Trump’s threat of an additional 100% tariff on Chinese shipments has raised fears of a global recession, weighing on sentiment.

BTC climbed to an October 6 record high of $125,761 before sliding to $103,587 on Friday, October 17.

US BTC-Spot ETF Flows Signal Market Caution

The US BTC-spot ETF market reported net outflows of $1.23 billion in the reporting week ending Friday, October 17. Outflows pushed BTC below $105,000 before Saturday’s recovery. Despite spot ETF outflows, October’s inflows have delivered price support, preventing a BTC drop below $100,000.

BTC-spot ETF issuers have reported October net inflows of $3.78 billion, following inflows of $3.51 billion in September. Notably, BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) is the only ETF with monthly inflows. According to Farside Investors, key flows for October include:

• IBIT has seen net inflows of $4.0 billion, maintaining its market dominance.
• Fidelity Wise Origin Bitcoin Fund (FBTC) reported net inflows of $0.27 billion.
• Meanwhile, Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB) have registered net outflows of $0.58 billion.

Fed Rate Cut Bets Keep Price Recovery Hopes Alive

While spot ETF outflows have weighed on demand, markets are betting on back-to-back Fed rate cuts in October and December. Expectations of multiple cuts have provided price support above the $100,000 psychological level.

According to the CME FedWatch Tool, the chances of 25-basis point rate cuts in October and December stand at 99% and 94%, respectively. Notably, there is also an increasing chance of a 50-basis-point cut in December, 6.0%, up from 0% on October 10.

The prolonged US government shutdown has fueled speculation about more aggressive monetary policy easing. The 2018-2019 shutdown shaved 0.4% off the US GDP.

Deteriorating labor market conditions and a waning US economy could support a more dovish Fed rate path.

Key Week Ahead: Capitol Hill, US-China Trade Developments, and US Data in Focus

The coming week could be pivotal for US BTC spot ETFs and BTC’s price trajectory. An end to the US government shutdown would likely expedite the release of key US labor market data, such as the delayed US jobs report.

Weaker wage growth, falling nonfarm payrolls, and higher unemployment could cement bets on aggressive Fed rate cuts. A more dovish Fed policy stance would likely fuel demand for spot ETFs and BTC. Conversely, stronger-than-expected labor market data may temper bets on multiple Fed rate cuts, potentially weighing on risk appetite.

ETH Breaks Below $4,000: Spot-ETH Demand Slumps

As BTC retreated, weakness spilled over into the broader crypto market, pulling Ethereum (ETH) below the $4,000 psychological support level.

ETH has fallen 6.42% this week, leaving it down 6.14% for October. US ETH-spot ETF issuers saw net outflows of $311.8 million in the reporting week ending October 17. Outflows for the week contributed to ETH’s drop as US-China trade tensions triggered a flight-to-safety.

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

Key Drivers for BTC Price Outlook

Several key events will drive BTC’s near-term outlook:

• US Senate votes on the stopgap funding bill.
• US economic indicators.
• Legislative developments: the Market Structure Bill’s passage on Capitol Hill.
• US BTC-spot ETF flows.

BTC Price Scenarios:

• Bullish Scenario: An extended US government shutdown, bipartisan support for the Market Structure Bill, easing US-China trade tensions, and ETF inflows. These factors could send BTC toward $125,000.
• Bearish Scenario: US government reopens, rising risks of US stagflation, legislative setbacks, rising US-China trade tensions, or ETF outflows. These factors could push BTC below $100,000.

Technical Analysis

Bitcoin Analysis

BTC trades below the 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bearish bias.

• Upside Target: A breakout above the 200-day EMA would bring $110,000 into play. A sustained move through $110,000 could pave the way toward the 50-day EMA and the $115,000 resistance level.
• On the downside, a drop below $103,576 could expose the $100,000 psychological support level. If breached, $95,000 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 Demand

Turning to Ethereum (ETH), the token trades below its 50-day EMA, while remaining 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 enable the bulls to target the 50-day EMA. A sustained move through the 50-day EMA could open the door to testing the $4,500 resistance level.
• On the downside, a break below $3,750 may expose the 200-day EMA. If breached, $3,287 would be the next key support level.

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