Bitcoin (BTC) Price Analysis: Can Vanguard’s ETF Shift Unlock New Demand?

US Economic Data Challenges Fed Rate Cut Expectations

Bitcoin (BTC) dropped below the crucial $110,000 level on better-than-expected US data, challenging expectations of multiple Fed rate cuts in the fourth quarter.

The US economy expanded 3.8% quarter-on-quarter in the second quarter. Meanwhile, initial jobless claims fell to 218k (week ending September 20), down from 232k (week ending September 13). Furthermore, the US Core PCE Price Index rose 2.9% year-on-year in August, matching July’s increase.

A resilient US economy and stable labor market, amid an elevated inflation environment, could signal a more hawkish Fed rate path. Higher borrowing costs may dampen demand for risk assets such as BTC.

US BTC-Spot ETF Outflows Reflect Investor Caution

Weakening demand for US BTC-spot ETFs reflects investor sentiment toward the Fed’s monetary policy stance. Spot ETF issuers reported net outflows of $418.3 million on Friday, September 26, following the previous session’s outflows of $253.4 million. Four days of outflows in the week ending September 26 led to total net outflows of $897.6 million for the week.

Fading bets on multiple Fed rate cuts in the fourth quarter and weekly outflows sent BTC from $115,292 on Monday, September 22, to $109,780 on Friday, September 26.

Despite the pullback, BTC has risen 1.21% month-to-date, with net monthly inflows of $2.56 billion cushioning the downside.

Reports that Vanguard is reversing its stance on giving investors access to crypto-spot ETFs could provide another avenue for investor demand.

Crypto commentator Joe Consorti reacted to the Vanguard news, stating:

“Vanguard will reportedly lift the ban on bitcoin ETFs for its brokerage clients, potentially opening the floodgates for $11T of capital. If the same share of its clients’ AUM allocated to bitcoin ETFs as BlackRock, that’s a ~$74B unlock.”

Pivotal Week Ahead: US Jobs Report in Focus

The week ahead could prove pivotal for the US BTC spot ETF market and BTC’s price trajectory. Crucial labor market and services sector data could dictate the Fed’s October interest rate decision and outlook for rate cuts.

Economists forecast the ISM Services PMI to hold steady at 52 in September. A pickup in services sector activity, higher prices, and rising employment would signal economic momentum, given that the services sector accounts for around 80% of the US GDP. Conversely, a lower PMI reading, weaker labor market data, and softer prices could boost bets on a Fed rate cut.

However, with the Fed’s increased focus on the labor market, Friday’s US Jobs Report will be the main event. Resilient wage growth, higher-than-expected nonfarm payrolls, and steady unemployment may signal a pause in monetary policy adjustments. On the other hand, weaker labor market conditions could cement an October Fed rate cut, lifting sentiment.

Bitcoin’s continued pullback from its August record high of $123,731 also weighed on demand for Ethereum (ETH).

ETH Slides Below $4,000 as September ETF Outflows Accelerate

While Bitcoin dropped below the $110,000 level on falling institutional demand, Ethereum (ETH) tumbled below the psychological $4,000 level.

Despite rallying 4.14% on Saturday, September 27, ETH has plunged 10% in the current week. US ETH-spot ETF outflows sent the token crashing to a low of $3,829 on Thursday, September 25. Weekend price moves occurred after the ETF markets’ reporting week.

The US ETH-spot ETF market reported total net outflows of $795.8 million in the week ending September 26, resulting in outflows of $377.5 million month-to-date. Monthly outflows could continue pressuring ETH, barring a strong surge in demand during the final two sessions of the month.

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

Key Drivers for BTC Price Outlook

Several macro and market factors will drive BTC’s near-term outlook:

• Legislative developments: the Market Structure Bill’s progress toward a Senate floor vote.
• US economic data: US Services PMI and labor market data.
• FOMC members’ speeches.
• US BTC-spot ETF flows.

BTC Price Scenarios:

• Bullish Scenario: Softer US economic data, dovish Fed rhetoric, progress on the Market Structure Bill, and ETF inflows. These factors could drive BTC toward its record high of $123,731.
• Bearish Scenario: Rising US stagflation concerns, hawkish Fed signals, legislative setbacks, or ETF outflows. These factors could drag 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 short-term bearish bias but bullish longer-term momentum.

• Upside Target: A breakout above $110,000 could pave the way to the 50-day EMA. A sustained move through the 50-day EMA may bring the record high of $123,731 into sight.
• On the downside, a drop below the 200-day EMA could enable the bears to test the crucial $100,000 psychological floor.

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

Ethereum ETF Outlook and Demand

Turning to Ethereum, the token trades below its 50-day EMA but remains above its 200-day EMA, signaling a bearish near-term bias.

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

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