Spot Fund Outflow and Geopolitical Crisis… Can Bitcoin Sustain the $70,000 Support Level?

▲ Bitcoin (BTC), oil price drop/ChatGPT generated image ©

With institutional investors' capital outflow and deepening geopolitical clouds sweeping over the virtual asset market, major cryptocurrencies, including the market leader Bitcoin (BTC) and XRP (Ripple), have all turned bearish, fueling investor anxiety.

According to cryptocurrency market data aggregator CoinMarketCap on April 9 (local time), Bitcoin is trading at $71,009.36, down 0.99% over the past 24 hours, leading the overall market downturn. While Bitcoin performed relatively well amidst a 1.36% decline in the overall virtual asset market, it is showing a risk-off trend strictly linked to geopolitical news, exhibiting a high 85% price correlation with gold, a representative safe-haven asset, amid macroeconomic instability.

The most direct cause of this downturn is the renewed outflow in the spot fund market. On April 7 alone, a massive net outflow of $159.05 million occurred from Bitcoin spot Exchange Traded Funds (ETFs), primarily from Fidelity and Grayscale funds. The institutional investor sentiment, which seemed to be recovering for a while, has turned cold again, and the disappearance of the key buying momentum in the spot market has dragged down prices.

Adding to this, the escalating conflict between the US and Iran has fueled the fire. Concerns over the Middle East situation, including US President Donald Trump's warning remarks regarding the Strait of Hormuz, have significantly dampened risk appetite across the macroeconomic spectrum. As a result, the short-term price direction of Bitcoin has become entirely dependent on geopolitical news, such as whether military tensions in the Middle East ease.

The market's attention is now focused on the US Securities and Exchange Commission's (SEC) regulatory roundtable on the US cryptocurrency market structure bill, the Clarity Act, scheduled for April 16. Technically, Bitcoin is precariously testing the lower bound of its recent trading range. If it holds the $70,000 support level, it could potentially rise towards the $72,000 resistance level, but if this line breaks, there is a constant risk of a sharp fall to $68,000.

Trends in the derivatives market also support a wait-and-see approach. Open interest decreased by 4.5% over the past 24 hours, indicating a reduction in leveraged investment. The market has paused without a clear direction amidst fund outflows and macroeconomic uncertainty. A neutral approach, mindful of increased volatility, seems necessary until institutional capital inflows resume and the stance of the upcoming regulatory authorities is confirmed.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*