Bitcoin (BTC) defended the $62,000 level and bounced back to reclaim $65,000 as the cryptocurrency market put in a modest rally as part of a broader recovery after weeks of turbulence and downside pressure. The flagship cryptocurrency traded around $63,000 on Tuesday, pushing higher on Wednesday as AI fears took a back seat and the software sector recovered nearly 2% after a bruising few weeks.
However, analysts have flagged weak volumes, highlighting that downside risk remains if the current rebound lacks the strength to sustain itself. Bulls have prevented an immediate break below the $62,000 level, allowing the price to stabilize.
Is Smart Money Quietly Exiting Bitcoin ETFs?
US spot Bitcoin ETFs have recorded nearly 3.8 billion in outflows over five straight weeks, with nearly $400 million pulled in a single session. The outflows have quietly flipped the narrative from accumulation to de-risking. The ETF outflows are significant because when investors pull capital, the issuers must sell the underlying BTC, creating direct spot selling pressure. With the market short on bids, the impact of this spot selling pressure is significant.
BlackRock’s IBIT and Fidelity’s FBTC have registered substantial outflows. The outflows also signal that the redemptions are not confined to smaller ETFs and investment products. Consistent outflows over five straight weeks mean the withdrawals are planned with intent as institutional investors look to minimize risk amid a trying economic situation. Meanwhile, Bitcoin miners have been raising liquidity, with Bitdeer liquidating its entire Bitcoin holdings. This adds to the Bitcoin supply even as demand wanes.
Coinbase BTC Premium Flips Positive
With Bitcoin (BTC) reclaiming the $65,000 mark, the Coinbase Premium has flipped to positive for the first time in forty days. The move comes after the flagship cryptocurrency rebounded from a drop to $62,900, a level where buyers finally stepped in to halt the decline. Trading volumes have also increased, rising 22% to $46 billion, while futures volume rose 6.2% to $74.8 billion.
The Coinbase Premium Index measures the price difference between Coinbase and global cryptocurrency exchanges. A positive reading means Bitcoin is trading slightly higher on Coinbase, reflecting stronger demand in the US. The shift to positive territory comes amid substantial outflows from US spot Bitcoin ETFs, with investors pulling $3.8 billion over the past five weeks. While ETF outflows suggest capital flight, the Coinbase Premium flipping to positive suggests some investors may be stepping back in through exchange flows.
Meanwhile, EMJ Capital founder Eric Jackson believes the sell-off is a purification of Bitcoin’s bull case, arguing that a stronger, longer-term institutional investor base could emerge. Jackson believes BTC’s price action will be more stable in the future despite the ongoing institutional exodus.
“BTC didn’t fail as an asset. It succeeded as an ETF. And that’s the problem.”
According to Jackson, Bitcoin is moving lockstep with BlackRock’s iShares Expanded Tech-Software Sector ETF (IGV). BlackRock also owns IBIT, the world’s largest Bitcoin ETF.
“From $126K to $63K. Every time IGV sells off, BTC sells off with it. That’s not a store of value. That’s a high-beta tech position with a different logo. IBIT changed who owns Bitcoin.”
Blockchain Association Pitches Tax Proposals To Congress
The Blockchain Association has pitched a tax proposal for crypto to Congress and met with lawmakers working on a crypto tax bill. The move is seen as an attempt by the group to have a key role in shaping one of the industry’s top policy priorities. The lobby group’s crypto tax policy positions, released on Tuesday, call for stablecoins to be treated as cash for ordinary purchases. It also called for a “de minimis” tax exemption on “low-dollar” crypto transactions. The group argued,
“Tax reporting for ‘negligible gains or losses from routine transactions’ imposes disproportionate costs on individuals and overwhelms tax administration without meaningful revenue upside.”
The group also offered its support for extending wash-sale rules to digital assets, limiting investors from claiming losses if they repurchase the same asset within a specified period.
Bitcoin (BTC) Price Analysis
Bitcoin (BTC) and the cryptocurrency market registered a modest rally on Wednesday as fears around AI eased and the software sector (IGV) gained 1.7% after a bruising few weeks. The flagship cryptocurrency is up nearly 4% over the past 24 hours, trading around $65,520. The rebound also highlighted Bitcoin and crypto’s correlation with technology stocks, as software shares, represented by the iShares Software Sector ETF (IGV), also rebounded after heavy losses.
The gains came after several companies, including Intuit and DocuSign, announced partnerships with Athropic, signalling to the markets that incumbents may be able to adapt rather than be displaced. On the other hand, traditional assets like gold retreated, while crude oil fell 0.5% as geopolitical tensions eased. Middle East tensions de-escalated after Majid Takht-Ravanchi, Iran’s deputy foreign minister, stated that the country “is ready to take any necessary step to reach a deal with the US.”
According to analysts, Bitcoin is stabilizing after a corrective phase, although it still trades below its short-term trend pivot near the mid-Bollinger band, located near the $67,000 mark. This is the zone that separates a relief rally from a sustained recovery attempt. Momentum indicators are also showing an improvement from oversold conditions, while the Relative Strength Index (RSI) has recovered from sub-30 levels recorded earlier in February. However, the RSI remains below 50, indicating that bulls have yet to establish complete control. If the latest recovery maintains momentum, it could reclaim the $70,000 mark, increasing investor confidence that the bearish trend is reversing. However, failure to reclaim the level could leave Bitcoin vulnerable to another pullback towards the $60,000 mark.
Despite the recovery, underlying market conditions warrant caution. During sustained rallies, price action is accompanied by strong bullish participation. However, trading activity remains subdued, raising questions about the strength of the ongoing rally.
Bitcoin (BTC) started the previous week facing substantial volatility before registering a marginal increase to $68,858. Selling pressure returned on Tuesday as the price fell by over 2% to $67,466. Sellers retained control on Wednesday as BTC fell 1.55% to $66,419. Despite the selling pressure, BTC recovered on Thursday, rising nearly 1% to $66,972. Buyers retained control on Friday as the price rose 1.51% to $67,984.
Source: TradingView
Price action was muted over the weekend as BTC registered a marginal decline on Saturday and fell 0.50% on Sunday to $67,617. Selling pressure intensified on Monday as the price fell by over 4% to $64,625. BTC fell to a low of $62,534 on Tuesday before settling at $64,038, ultimately dropping almost 1%. The flagship cryptocurrency has rebounded during the ongoing session, and is up nearly 2% at $65,296.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Bitcoin Price Analysis: BTC Reclaims $65,000 But Low Volume Raises Concerns was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.