Bitcoin Price at Risk? Bearish Outlook as MVRV and Fear & Greed Index Decline

Bitcoin’s price has been experiencing a period of consolidation, with limited movement recently. As of Saturday, Bitcoin was trading at around $97,600, showing a modest 1.2% increase. Despite this slight uptick, the overall sentiment in the market remains neutral, and there are several key factors indicating that Bitcoin’s price could be at risk of further stagnation or even decline.

A major reason behind Bitcoin’s lack of momentum is investor caution, as many are waiting for a clear catalyst to drive the market forward. Data from SoSoValue indicates that American demand for spot Bitcoin ETFs has waned, leading to significant outflows from these funds. Over the past four days, Bitcoin ETFs experienced net outflows worth more than $650 million. On-chain analyst Ali Martinez highlighted that when spot Bitcoin ETFs sell Bitcoin, this can create downward pressure on the price, as it signals investor outflows and increases market volatility. These sales could be driven by factors such as fund rebalancing, institutional portfolio shifts, or redemptions.

Further compounding the bearish sentiment surrounding Bitcoin is the ongoing geopolitical uncertainty and concerns about interest rates. Investors are worried about potential trade wars, especially with President Donald Trump’s tariffs, which could lead to heightened market volatility. Additionally, inflation data released recently showed an uptick in both the headline consumer inflation rate and core CPI, which could continue to weigh on risk assets, including Bitcoin.

Bitcoin’s performance tends to falter when the Federal Reserve is hawkish on interest rates. In his recent testimony before Congress, Fed Chair Jerome Powell indicated that the central bank is likely to keep interest rates elevated until inflation shows signs of falling. This hawkish stance makes it more challenging for risky assets like Bitcoin to perform well, leading investors to remain on the sidelines.

Bitcoin’s technical indicators also point to a cautious market. The fear and greed index, a widely followed sentiment indicator, has dropped from a level of 90 (extreme greed) in 2024 to a more fearful level of 40. This decline in sentiment is further confirmed by the drop in the Market Value to Realized Value (MVRV) indicator’s Z score, which has fallen to 2.49 from its year-to-date high of 3. The MVRV indicator is used to assess whether a cryptocurrency is overvalued or undervalued. A lower MVRV score often suggests potential accumulation by smart money investors, but it also points to an overall cautious market sentiment.

From a technical perspective, Bitcoin’s price has been trading below the $100,000 mark for several days, and it has been confined to a narrow range over the past two months. One bearish signal is that Bitcoin recently dropped below its 50-day Exponential Moving Average (EMA), a key technical indicator that suggests weakening momentum. Additionally, Bitcoin has formed a double-top chart pattern around the $108,440 level, which further strengthens the bearish outlook.

As long as Bitcoin remains below this double-top resistance at $108,440, the price could face continued pressure. If the price manages to break above this level, however, it could invalidate the bearish scenario and potentially lead to a rally. On the downside, if Bitcoin drops below the $89,055 neckline of the double-top pattern, it could signal further declines, with the next key support level seen at $73,613.

In conclusion, Bitcoin’s price outlook remains bearish as long as it stays within its current range and below the key resistance levels. A break above $108,440 could signal a shift in momentum, while a drop below $89,055 could trigger more downside, potentially testing lower support levels. Investors will likely continue to watch the macroeconomic environment, including inflation trends and interest rates, for further clues on Bitcoin’s future direction.