Bitcoin prices continue to consolidate as the fear and greed index stabilizes at neutral, and the market’s Z score has dropped to a three-month low.
Bitcoin (BTC), the leading cryptocurrency by market volume, remains within a narrow price range. As of Saturday, it was trading at approximately $97,600, reflecting a 1.2% increase.
Reasons Behind Bitcoin’s Price Stagnation
This price action coincides with investors remaining cautious, waiting for the next market catalyst. Recent data indicates a significant decline in American investors’ interest in spot Bitcoin ETFs, with net outflows exceeding $650 million in just four days.
The selling pressure on Bitcoin ETFs suggests that they are offloading BTC from their holdings, which can negatively impact prices and increase market volatility. This trend may result from investor redemptions, institutional portfolio adjustments, or fund rebalancing. Simultaneous selling from multiple ETFs can further exacerbate price fluctuations, particularly during low liquidity periods.
Moreover, discrepancies between ETF prices and Bitcoin’s spot price may attract arbitrage traders looking to profit from these variations.
Market Influences
Bitcoin’s stagnation is further complicated by ongoing geopolitical tensions and the potential for prolonged high interest rates. Investors are particularly wary of potential trade wars stemming from tariffs, which could elevate market volatility.
Recent inflation data revealed an increase in consumer inflation, climbing from 2.9% in December to 3% in January, with core CPI also marginally increasing. When the Federal Reserve adopts a hawkish stance, risky assets like Bitcoin typically underperform. In a recent congressional testimony, Federal Reserve Chair hinted at maintaining current rates until inflation shows a clear decline.
Investor Sentiment Wavers
The fear and greed index has decreased significantly, dropping from an extreme greed level of 90 in 2024 to 40, indicating rising investor apprehension.
Additionally, the Z score of the MVRV (Market Value to Realized Value) indicator has declined to 2.49 from a year-to-date high of 3. An MVRV value below 3.5 indicates that a cryptocurrency is considered undervalued. Historically, declines in the fear and greed index alongside MVRV and futures open interest can signal potential accumulation by savvy investors.
Technical Analysis of BTC Prices: Key Resistance Level at $108,440
Recent technical analysis reveals that Bitcoin’s price has remained below the $100,000 threshold for several days and has followed a tight range over the past two months. Currently, it trades below the 50-day Exponential Moving Average, indicating a bearish trend. A double-top chart pattern has formed at $108,440, which suggests a continued bearish outlook unless Bitcoin surpasses this resistance level.
A decline below the significant support level of $89,055 may trigger further drops, with subsequent support anticipated at $73,613.
Meanwhile, Ethereum is trading at $2,693.91, reflecting a slight decrease of 0.3%.
