Bitcoin Price Outlook: BTC Retraces As ETF Inflows Stay Strong

(MENAFN- DailyFX (IG)) Higher yields remain a headwind

Bitcoin's retracement is also taking place against a difficult interest-rate backdrop.

The US 10-year Treasury yield has so far reached 5.23%, its highest level since 2007. Higher bond yields can weigh on Bitcoin by making interest-bearing assets relatively more attractive while tightening broader financial conditions.

The Federal Reserve's September rate hike has added to that pressure. Markets have also continued to consider the possibility of another rate increase while inflation remains a concern, with a 66% chance of another 25 basis point rate hike in October priced in.

The rise in Treasury yields is particularly notable because Bitcoin managed to rally strongly despite it. That resilience suggests that other forces, including ETF demand and concerns surrounding the longer-term sustainability of US fiscal and monetary policy, have been offsetting the conventional macro headwinds.

Bitcoin's recent resilience reflected continued fund inflows, accumulation by large holders and concerns over US fiscal and monetary policy, while also highlighting the importance of the sharp rise in Treasury yields.

Oil and the dollar add another layer of uncertainty

The macro backdrop has also become less straightforward as oil prices have moved higher again.

Rising crude prices can reinforce inflation concerns, potentially making it harder for the Federal Reserve to ease monetary policy. At the same time, a stronger US dollar can weigh on dollar-denominated assets such as Bitcoin.

Monday's (28 September) weakness has coincided with renewed uncertainty over the US-Iran conflict, higher crude prices and an elevated dollar. Market participants are also looking ahead to US inflation and labour-market data, which could influence expectations for the next Federal Reserve meeting.

This creates a potentially uncomfortable combination for Bitcoin: ETF demand remains strong, but macroeconomic conditions are becoming less supportive.

What next for Bitcoin?

From a technical perspective, the key question is whether the current retreat remains contained above the September breakout area.

The May-to-early September highs at $82,814.03-to-$82,035.16 represent the first important test. Bitcoin's ability to hold above this area would keep the recent breakout structure broadly intact, while a recovery through the 25 September high at $85,226.96 would improve short-term momentum.

Above the September $87,402.34 peak, attention would return to the next psychological levels, with $90,000 becoming an obvious target. A sustained move through $90,000 could then put the January high at $97,913.08 and ultimately the $100,000 level back into focus.

On the downside, a break below the $82,814.03-to-$82,035.16 area would make the retracement more significant and could bring the September low at $74,919.36 back into view.

For now, the strength of last week's ETF flows is an important counterweight to the pullback. Bitcoin has retraced from $87,402, but it has done so while more than $2.4 billion flowed into US spot ETFs.

That leaves the current move looking more like a test of the September rally than a clear rejection of it. The key issue for the next stage will be whether ETF demand remains strong enough to absorb profit-taking and macro pressure, allowing Bitcoin to stabilise and eventually challenge its recent high again.

Short-term outlook: neutral while above the 20 September low at $80,095.02, a rise above the 25 September high at $85,226.96 would be bullish

Medium-term outlook: bullish while above the 15 September low at $74,919.36

​Bitcoin daily candlestick chart Source: TradingView Important to know

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