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Bitcoin Falls Below $100,000 on Fed Outlook

On Wednesday, Bitcoin (BTC) fell below $100,000 for the first time in five sessions. Investors reacted to upward revisions to the Fed’s inflation and interest rate forecasts. A long-term higher interest rate could increase borrowing costs and impact demand for riskier assets.

The Fed’s policy outlook overshadowed the market’s optimism about BTC becoming a US strategic reserve asset (SBR). Wednesday’s pullback also underscored the Fed’s continued influence on the crypto market.

Commenting on BTC price movements, Tony Sycamore, market analyst at IG, said:

“Bitcoin trades lower at $100,904 (-5.0%) as risk sentiment took a hit and US yields and the US dollar (recovered) following the hawkish FOMC rate cut this morning,” in a post Above on BTC, yesterday we pointed out the apparent bearish divergence in the RSI and the possible formation of a daily momentum loss candle, which we said “increases the likelihood of a corrective “Pullbacks” would increase.”

US BTC Spot ETF Market: Will BlackRock’s ETF Save the Day?

On Tuesday, December 17, the US BTC spot ETF market extended its inflow streak to 14 sessions, the longest since February. BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) kept its winning streak going with net inflows of $741.4 million. Excluding IBIT, the US BTC spot ETF market saw net outflows of $247.5 million.

Early inflow trends for Wednesday’s session suggest that IBIT will need another excellent day to extend the inflow streak to 15 sessions. According to Farside Investors:

• Grayscale Bitcoin Trust (GBTC) recorded net outflows of $35.9 million.
• The Invesco Galaxy Bitcoin ETF (BTCO) saw net outflows of $25.2 million.
• Bitwise Bitcoin ETF (BITB) and ARK 21Shares Bitcoin ETF (ARKB) also reported net outflows.

Excluding the iShares Bitcoin Trust (IBIT), the US BTC spot ETF market saw net outflows totaling $84.3 million.

Demand from the US BTC spot ETF market remains crucial to price action, with the current inflow flow pushing BTC to an all-time high of $108,237.

Bitcoin price outlook

On Wednesday, December 18, BTC slipped 5.61%, reversing Tuesday’s 0.37% gain, to close at $100,189.

Short-term BTC price trends will depend on US BTC spot ETF flows, SBR-related news, and US government BTC sales. A large BTC sale by the US government amid waning demand for BTC spot ETFs could reignite fears of oversupply and potentially rise towards $95,000. Conversely, BTC spot ETF market inflows and advances toward an SBR could push BTC toward $110,000.