Bitcoin (BTC) experienced a moderate correction on March 27, dropping to $68,430 after failing to break above the $71,000 mark. Professional traders have shown a decline in bullish sentiment over the past week, suggesting that the $69,000 level may not hold. The inflows of Bitcoin spot ETFs will play a crucial role in determining BTC’s price.
Despite a rally from $63,800 to $70,000 leading up to March 27, only $151 million in leveraged short positions were closed in the BTC futures markets, indicating cautiousness among bears. This is surprising considering the significant net withdrawal of $888 million from U.S. Bitcoin spot exchange-traded funds (ETFs) last week.
Bitcoin has demonstrated resilience by recovering from a 17.6% drop without causing panic among spot ETF investors. However, some argue that the primary driver behind BTC reaching a new high before the April Bitcoin halving was the unexpectedly high inflows into spot ETFs. This highlights the importance of monitoring such trends for bulls.
This week, there has been a reversal in spot ETF flows, with a total of $418 million in net inflows recorded on March 26. This indicates genuine institutional demand for Bitcoin, even as its price remains just 4% below its peak. However, this does not guarantee that $69,000 will serve as a support level.
To determine the sentiment of whales and arbitrage desks, analysts analyze aggregated positions across spot, perpetual, and quarterly futures contracts. On Binance, the long-to-short ratio among professional traders has slightly decreased from 1.50 to 1.42. On OKX, the sentiment has also diminished, with the long-to-short ratio currently at 1.49 in favor of longs. This reduction in optimism among top traders suggests that other factors may be dampening bullish sentiment.
Bitcoin’s performance may be impacted by the global economic downturn, especially after the S&P 500 index failed to maintain its all-time high. Uncertainty around the U.S. Federal Reserve’s interest rate decisions is causing investors to lose confidence. Rate cuts are generally seen as positive for risk-on assets like Bitcoin, but the expectations of a rate cut at the Federal Reserve’s May 1 meeting are only at 8%.
Analysts caution that a rate cut may signal troubles rather than prosperity. Concerns over lack of earnings growth and overemphasis on artificial intelligence are also contributing to market risks.
The decrease in preference for leveraged long positions in Bitcoin’s top traders reflects broader economic recession concerns and external pressures, such as the U.S. Justice Department’s charges against KuCoin exchange and the European Parliament’s discussions on limiting cryptocurrency payments. However, this should not alarm investors or signal that Bitcoin will trade below $69,000.
This article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.