Bitcoin edges down but remains rangebound; is a breakout coming?

• Could easing reflation fears spur a move higher? 

• BTC ETF saw outflows $585.6 million last week 

• Bitcoin Fear & Greed index is neutral 

• Bitcoin technical analysis 

Bitcoin eases below 96k and continues consolidating between 94k and 98k, a familiar range within which it has traded for the past two weeks.  

The slow progress towards a US strategic Bitcoin Reserve, a more hawkish Federal Reserve, and news for FTX repayments starting this week have weighed on Bitcoin demand. However, the fact that the price hasn’t moved out of range suggests that optimism toward the longer-term outlook remains. 

Despite the new Trump administration's lack of tangible moves favoring crypto, worries over reflation may start to ease. President Trump's trade tariffs aren’t as bad as initially feared, and Federal Reserve officials have suggested this week that the impact on inflation from Trump’s trade tariffs could be limited.  

Fed Governor Christopher Waller played down the prospect of Trump's trade tariffs stoking inflation, saying that such levies would only temporarily increase prices.  

This shift in the macro backdrop could aid a breakout and Bitcoin's next leg higher. The USD fell 1.2% last week, and other risk assets, such as US equity indices, trade around record highs. 

Investors will look to the release of this week's minutes from the Federal Reserve monetary policy meeting in January and commentary from Federal Reserve officials for further clues about the outlook for interest rates. 

BTC institutional demand drops 

Spot Bitcoin exchange-traded funds experienced net weekly outflows last week, ending a six-week streak of inflows that totaled just over $5 billion. According to data from SoSo Value, the 12 spot Bitcoin ETFs reported net weekly outflows of $585.6 million last week. BTC ETFs were closed yesterday in observance of Presidents' Day, a public holiday in the U.S. BTC ETFs will need sustained inflows for the price to break out of its range. 

Bitcoin fear & Greed is neutral 

The Bitcoin Fear & Greed Index indicates that Bitcoin trader sentiment has reached a neutral level as price consolidation persists. The index, which tracks the average sentiment among Bitcoin traders and the broader cryptocurrency market, currently stands at 47, reflecting a neutral sentiment. This figure represents a sharp decline from the end of January, when Bitcoin was in the extreme greed zone shows that now investors are neither bullish nor bearish as they wait for fresh catalysts. 

Conclusion 

The macro backdrop could turn more supportive of Bitcoin should reflation fears ease. However, BTC ETF demand needs to see sustained inflows for a BTC breakout, and the Fear & Greed index points to ongoing consolidation. 

BTC/USD technical analysis 

BTC/USD remains in a consolidation pattern, capped by the 50 SMA on the upside and by 94k on the downside. The price has broken below the 100 SMA, and the RSI is below 50, keeping sellers optimistic of further losses. 

Sellers are testing the rising trendline support dating back to October last year. Below here 94k comes into play.  However, sellers will need to break below the 91.5k support zone to create a lower low which could spur a deeper selloff towards 85k. 

Meanwhile, buyers need a rise above the 50 SMA at 98.8k and 100k psychological level to extend gains towards 105k, 109.5k and fresh record highs.