Bitcoin price at a standstill near $87k as ETF outflows slowdown, is a reversal near?

Bitcoin price was muted on Tuesday even as outflows from its spot exchange-traded funds showed signs of slowing for the first time since Dec. 18.

According to data from SoSoValue, the 12 spot Bitcoin ETFs recorded $19.29 million net outflows on Monday, Dec. 29, marking an end to six consecutive days of triple-digit outflows that saw around $1.1 billion exit the funds.

Invesco’s BTCO led the outflows on the day with $10.41 million in redemptions, while BlackRock’s IBIT and ARK 21Shares’ ARKB followed with $7.92 million and $6.66 million withdrawals, respectively. Fidelity’s FBTC offset part of the outflows as it drew in $5.7 million, while the remaining ETFs saw “zero” outflows on the day.

As the pace of outflows decelerates, it indicates that institutional fatigue may be bottoming out, clearing the path for renewed capital entry should market conditions continue to stabilize.

Previously, Bitcoin price rallied to an all-time high of $126,080 in October, largely fueled by massive inflows in its spot ETFs over prior months. Since then, nearly $4.6 billion has flowed out of these investment vehicles.

As institutional stakeholders and large-scale capital allocators tend to drive the momentum of these regulated vehicles, their net flow patterns tend to influence price direction, liquidity, and the market’s risk appetite.

Meanwhile, some analysts have observed that long-term Bitcoin holders have stopped selling their assets for the first time since July, as of today, Dec. 29.

Commenting on the situation, well-followed analyst Ted Pillows pointed out that this reduction in selling pressure could help reverse the trend.

“Things are looking good for a relief rally here,” he said.

Other market commentators were also projecting similar opinions. 

“Bitcoin will bottom out soon. Relief rally is coming soon…Be ready,” said Crypto Caesar.

On the daily chart, Bitcoin price has been forming a symmetrical triangle pattern since mid-November this year. Such a pattern is characterized by two converging trendlines forming a horizontal symmetrical triangle shape, which marks a phase of consolidation before a potential breakout.

A breakdown from the lower trendline tends to lead to further downside, while a breakout from the upper side has historically been followed by strong rallies.

At press time, BTC price was trading closer to the lower trendline, suggesting the asset is approaching a potential make-or-break zone.

Momentum indicators, while having shifted slightly to the positive, remain near neutral thresholds. This points to a possible consolidation phase. 

As such, renewed institutional inflows could serve as the catalyst necessary for a structural recovery.

For now, traders will be closely watching the $86,000 psychological support level, as a drop below that could trigger a fall to its November low at $82,175.

On the contrary, $91,500, which closely aligns with the 23.6% Fibonacci retracement level drawn from its October high to November low, will be the key resistance area to monitor.