Bitcoin Price Crashes as Spot BTC ETFs Erase Monthly Gains and Turn Negative

Key Insights

• Bitcoin price dropped to the 50-day moving average on Tuesday.
• Spot Bitcoin ETF outflows have jumped, erasing the gains made in the first six days.
• The coin has formed a rising wedge pattern, pointing to more downside.

Bitcoin price retreated for five consecutive days, continuing a trend that started on May 6 when it peaked at $82,847. This retreat happened after the coin formed the risky rising wedge pattern and as spot Bitcoin ETFs lost momentum and erased all the gains made earlier this month.

Spot Bitcoin ETFs Have Turned Negative

Bitcoin ETFs had a solid start of the month. Data shows that these funds added over $1.688 billion in the first five days of the month. This was a notable increase since these funds added over $1.97 billion in assets in the previous month.

These gains were short-lived as the funds have erased all the gains made earlier this month. Data compiled by SoSoValue shows that the funds had over $648 million in outflows on Monday, higher than the $290 million that they shed on Friday.

They are now in their second consecutive week in the red after losing $1 billion last week. Their cumulative net inflows since their approval stood at over $57 billion. They now hold $100 billion in assets under management.

The ongoing spot Bitcoin outflows are a sign that demand from institutional and retail investors continues to deteriorate this month. In most cases, this is usually a bearish sign since it signals that they are booking profits after the last rally that pushed it from $60,000 to $82,847.

There are more signs that Bitcoin demand is falling. For example, CoinGlass data shows that the coin’s liquidations have remained steady in the past few days. Bitcoin positions worth over $99 million were liquidated in the last 24 hours. Leveraged positions valued at over $200 million were wiped out a day earlier.

Another data shows that the Coinbase Premium Index has remained in the negative zone in the past few weeks. This number means that demand from American investors has waned in this period.

Soaring US Bond Yields Limit Federal Reserve Cuts

There are a few reasons why Bitcoin has lost momentum this month. One of the core one is that inflation has remained at an elevated level this year, pushing bond yields in the US and other countries to the highest levels in years.

For example, in the United States, the ten-year yield has jumped to 4.6% for the first time in years. The 30-year yield has jumped to 5.15%, the highest it has been in years. Just last week, US authorities raised $25 billion 30-year bonds at a 5% rate for the first time since 2007.

The same trend is happening in other countries like Japan, Germany, the United Kingdom, and France. In most cases, when bond yields surge, it raises concerns that the central banks will embrace a hawkish tone. It also pushes people to rotate from risky assets to safe havens.

One factor driving the bond market is soaring inflation. Data released last week showed that the headline CPI jumped to 3.8% in April.

Bitcoin Price Prediction as it Settles at the 50-Day Moving Average

Technicals suggest that the BTC price may have more downside if it loses the key support at $76,700, the 50-day moving average. It has already dropped below the lower side of the rising wedge pattern. This pattern is characterized by two rising and converging trendlines.

The coin is attempting to cross the Major S/R level of the Murrey Math Lines tool. Also, the Relative Strength Index (RSI) and the MACD indicators have continued falling.

Therefore, the coin will likely continue falling as sellers target the key support at $75,000. Moving below that level will point further downwards, potentially to $70,000.

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