These Economic Factors Could Put Bitcoin in a ‘Slow Bleed Environment’ (Bitfinex)
With risk assets in the financial sector currently looking vulnerable, market experts have identified economic factors that could put bitcoin (BTC) in a similar light and push it into a “slow bleed environment.”
According to a Bitfinex Alpha report, risk assets are beginning to look vulnerable due to concerns that United States authorities may not cut interest rates soon. These assets, including BTC, were dented last week after regulators released stronger-than-expected jobs data. However, BTC was resilient and gracefully navigated the impact of the data due to the continued inflows into the U.S. spot Bitcoin exchange-traded funds (ETF) market.
Forthcoming U.S. Meeting and Report
Since May 13, U.S. spot Bitcoin ETFs have been on a 19-day inflow streak, which was broken just yesterday (June 10). The continued inflows played a significant role in underpinning bitcoin’s price on Friday after the digital currency dropped by more than three grand within an hour.
Analysts said that while the ETF inflows are bolstering bitcoin’s price, the trend could be disrupted in the coming week due to inflation signals that may emerge after the U.S. Consumer Price Index report. In addition, the forthcoming U.S. Federal Open Market Committee meeting on interest rates could also impact the ETF flows.
“The outcomes of these near-term economic signals could impact continued inflows and put BTC into a ranging or slow bleed environment,” Bitfinex said.
Besides the forthcoming meeting and report, funding rates are currently high in bitcoin perpetual futures markets, indicating that traders are paying a premium to open long positions. The rising bitcoin CME futures open interest (OI) and the ETF inflows suggest that traders are leveraging the arbitrage opportunity between futures and spot markets.
Bitcoin OI across major crypto exchanges hit an all-time high of $36.8 billion on June 6, and despite the price correction on Friday, OI is currently above $36 billion. Bitfinex likened the Friday plunge to a leverage flush, which wiped out many leveraged long positions on altcoins and neutralized funding rates.
Bitcoin Unable to Push Past Range High
Despite positive ETF flows offsetting the pressure on BTC, the asset has been unable to push past its range high. Before the plunge on Friday, BTC rallied to a range high at over $71,500 for the first time since the sub-$57,000 range low deviation was reached in May.
While Bitfinex does not expect a major decline immediately, bitcoin’s failure to move past range highs remains a cause for concern.
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