After concluding the previous week with an indecisive doji candlestick pattern, Bitcoin encountered a decisive shift as bearish sentiment took hold, marked by substantial sell volume following a nearly six-week bull rally.

Monday’s trading session unfolded with Bitcoin exhibiting sideways movement, fluctuating within the range of $69,000 to $66,500.

However, the intraday peak of $69,000 proved to be the weekly high, as traders in the subsequent Asian session triggered a wave of momentum selling, precipitating a steep overnight decline of almost $7,000 to $62,300 during early pre-market hours on Tuesday. Consequently, all Bitcoin spot ETFs listed on the NYSE commenced the morning with a notable gap down of -5%.

The market has experienced several instances of “gap downs” with spot ETFs since their inception, often presenting buying opportunities as prices are bid up. This recent occurrence was no exception, as prices rallied approximately 3% or $2,000 intraday, reaching the mid $60,000s.

However, this rally was short-lived, swiftly fading as the Asian session resumed, with Bitcoin retracing the entire upward move and plummeting to a low of $60,761 during pre-market hours on Wednesday. Notably, barely halfway through the week, Bitcoin underwent a significant intra-week swing from its high to low, exceeding $8,000 or -12%. Tuesday’s daily candle close of -8.34% marked the largest daily drop since the FTX collapse in November 2021!

The volatility continued as the market braced for the 2nd Federal Reserve meeting of the year, keeping the crypto rollercoaster in full swing. Following a dovish outlook from the Federal Reserve, Bitcoin staged an impressive rally, reclaiming significant ground to reach $68,249. The Fed’s tone, emphasizing potential interest rate cuts and a slower pace of quantitative tightening, injected renewed confidence into risk-on assets, including Bitcoin.

However, despite the nearly 10% price rally following the FOMC conference, the $68,249 price point marked the day’s high, representing a lower high compared to the $69,000 swing earlier on Monday.

ETF Flows Update

Spot ETF flows exhibited a notable net decrease compared to previous weeks, signaling a significant shift in trend with six consecutive days of net outflows. This shift likely acted as a catalyst for Bitcoin’s price decline over the past week. The majority of recent outflows originated from Grayscale’s GBTC fund, which experienced a substantial decrease of 5,900 BTC or $339 million in just one day.

Over the course of the week, more than 28,000 bitcoins exited the fund, resulting in a 7.35% reduction in its total BTC under management. Despite peaking close to $12.2 billion in net inflows on March 15th, the week concluded with a reduction to $11.2 billion, marking an 8.2% decrease that closely mirrors Bitcoin’s price decline for the week.

Open Interest Data

Bitcoin futures open interest experienced a notable decline over the past week, dropping from $35 billion to $32 billion by week’s end, marking a decrease of over 9%. This reduction suggests a decrease in market participation among traders, potentially driven by profit-taking and position closures amid anticipated market volatility during FOMC week. Despite the decrease in ETF flows and a 6% price depreciation in Bitcoin for the week, longer-term technical indicators continue to signal bullish sentiment.

While it’s unrealistic to expect ETF flows to increase indefinitely, the market was poised for a pullback given this fundamental metric. As the month draws to a close, all eyes are on Bitcoin’s monthly closure. To solidify a record monthly closing high, Bitcoin needs to close above $61,359 by March 31st.

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