Bitcoin (BTC) Slides as Spot ETF Outflows and Stagflation Fears Mount

Bitcoin Slides as Stagflation Fears Trigger ETF Outflow Surge

Bitcoin (BTC) fell 0.67% on Saturday, August 2, following Friday’s 2.1% slide, closing at $112,601. Crucially, BTC extended its losing streak to six sessions.

US economic indicators and fears of US stagflation overshadowed expectations of a Fed rate cut and legislative developments. BTC slid to a three-week low of $111,917.

On July 31, hotter-than-expected US inflation indicators tempered bets on a September Fed rate cut, weighing on sentiment. However, weak labor market data fueled fears of an economic slowdown and stagflation concerns, triggering a sharper sell-off.

US BTC-Spot ETF Market Snaps Inflow Streak

Notably, concerns about the US economy impacted demand for US BTC-spot ETFs. In the week ending August 1, spot ETF issuers reported total net outflows of $642.9 million, snapping a seven-week inflow streak. According to Farside investors, weekly flows included:

• iShares Bitcoin Trust (IBIT) had weekly net inflows of $355.4 million.
• Meanwhile, ARK 21Shares Bitcoin ETF (ARKB) reported net outflows of $443.4 million.
• Fidelity Wise Origin Bitcoin Fund (FBTC) saw net outflows of $354.1 million.

While BlackRock’s (BLK) iShares Bitcoin Trust continued to draw inflows, the ETF issuer reported net outflows on August 1, the first since June 6. BTC-spot ETF flows continue to influence the price trajectory.

Key Drivers for BTC Price Outlook

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

• Legislative developments: the CLARITY Act’s progress on Capitol Hill.
• Upcoming US economic data, including the ISM Services PMI and jobless claims.
• US BTC-spot ETF flows.

BTC Price Scenarios:

• Bullish Scenario: A dovish Fed policy stance, bipartisan support for the CLARITY Act, upbeat US data, and ETF inflows. These factors could send BTC back toward its record high.
• Bearish Scenario: A hawkish Fed policy stance, legislative setbacks, weaker US data, or ETF outflows could drag BTC below $110,000.

For ongoing insights into macro trends, regulation, and ETF data, follow our analysis here.

Technical Analysis

Bitcoin Analysis

BTC remains above key trend indicators, including the 50-day and 200-day EMAs, signaling broader bullish momentum despite recent losses.

• Upside Target: A breakout above $115,000 could enable the bulls to target this week’s high of $119,775. A sustained move through $119,775 could pave the way to the July 14 record high of $122,055.
• On the downside, a drop below the 50-day EMA could bring the $110,000 support level into play. Sustained selling pressure may enable the bears to target the 200-day EMA and the crucial $100,000 support level.

The 14-day Relative Strength Index (RSI) at 43.54 suggests BTC may drop to $100,000 before entering oversold territory (RSI< 30).

Ethereum Slides Alongside Broader Crypto Market

Turning to Ethereum (ETH), ETH-spot ETF issuers reported total net inflows of $154.3 million in the week ending August 1 after weekly inflows of $1,312.7 million the previous week. However, the ETH-spot ETF market reported net outflows of $152.3 million on August 1, snapping a 20-day inflow streak, weighing on ETH demand.

ETF Store President Nate Geraci remarked:

“Spot eth ETF record inflows streak is over… Ends after 20 days. Big outflows from spot btc ETFs as well. Odd way to end what was perhaps the most important week ever for crypto. At least from a regulatory perspective.”

Despite the three-day losing streak, ETH continues to trade above the 50-day and 200-day EMAs, indicating bullish momentum.

• Upside target: A breakout above the $3,563 resistance level could enable the bulls to target the July 28 high of $3,942. A sustained move through $3,942 may pave the way to the $4,085 resistance level.
• On the downside, a drop below the $3,287 support level could bring the 50-day EMA into play.

The 14-day Relative Strength Index (RSI) at 51.22 suggests ETH could climb to $3,942 before entering overbought territory (RSI > 70).

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