Bitcoin and other cryptocurrencies are seeing a significant downturn, with major players like BlackRock reportedly dumping large amounts of assets. This comes as Bitcoin confirms a bearish divergence on larger time frames, retesting critical support levels. The market is reacting to substantial outflows from Bitcoin ETFs, particularly BlackRock’s, which saw nearly $300 million leave on a single Monday.
Bitcoin ETF Outflows and Bearish Signals
The daily numbers for Bitcoin ETFs revealed a net outflow of over $323 million on Monday. The majority of this outflow was attributed to the BlackRock Bitcoin ETF, which experienced outflows of around $292 million. These outflows occur when investors sell their ETF shares, forcing ETF providers like BlackRock to sell the underlying Bitcoin to meet redemption requests. This trend follows a pattern observed at the end of the previous week, suggesting continued downward pressure.
On the weekly chart, while the super trend indicator remains in the green, a significant bearish divergence has been confirmed. This divergence, indicated by higher highs in Bitcoin’s price and lower highs in the weekly RSI, has historically preceded pullbacks. Similar patterns were observed in late 2024, leading to a multi-month pullback, and in mid-2023, resulting in a two-month correction. The most significant instance was near the end of the 2021 bull market, which preceded the major 2022 bear market.
While not every bearish divergence guarantees a full-blown bear market, it signals a higher likelihood of bearish sentiment over the next one to two months. Consolidation or a pullback is expected, rather than significant bullish price action.
Key Takeaways
- Bearish Divergence Confirmed: Bitcoin shows a bearish divergence on weekly charts, suggesting potential pullbacks.
- ETF Outflows Continue: Significant outflows from Bitcoin ETFs, especially BlackRock’s, are putting downward pressure on prices.
- Short-Term Support: Bitcoin is retesting support levels between $110,000 and $112,000.
- Altcoin Season Unlikely: Bitcoin dominance remains above key support, indicating that an altcoin season is not currently in play.
- Ethereum Struggles: Ethereum faces strong resistance and record outflows from its ETFs.
Short-Term Bitcoin Price Action
On the 3-day Bitcoin chart, a bearish crossover has been confirmed, signaling increasing bearish momentum and a likely pullback in the coming weeks. While short-term bounces from support levels are possible, the larger time frames suggest a more bearish outlook for the next few weeks or months.
The daily chart shows Bitcoin bouncing from the support level around $112,000. However, a retest of this level is anticipated. Support is expected between $110,000 and $112,000. A confirmed break below this range could lead to a drop towards $106,000-$107,000.
Looking at the 8-hour chart, the short-term trend remains bearish, with lower highs and lower lows. The liquidation heatmap indicates new liquidity just below the current price, around $111.8K, suggesting a likely short-term target to clear this liquidity. Given the bearish signals, short positions are being favored over long positions.
Ethereum’s Record Outflows and Resistance
Ethereum experienced its worst day on record for spot ETFs, with over $465 million in net outflows on Monday. BlackRock’s ETF alone saw $375 million in outflows. This significant selling pressure is occurring while Ethereum struggles to break past a critical resistance area between $3.9K and $4.1K. Multiple rejections from this level have been observed over the past year, reinforcing its significance.
The bearish divergence on the daily Ethereum chart is still active, suggesting a potential for further pullbacks. Even a short-term bounce that creates a higher high in price might still result in lower highs on the RSI, forming a larger bearish divergence.
Altcoin Market Outlook
Solana is showing similar patterns, facing rejection from resistance levels around $167-$170. A break above this could lead to further resistance near $180 before the major resistance zone of $190-$200. Support is seen around $155-$156 and more significantly at $143-$146.
XRP has confirmed a bearish divergence on the weekly chart, similar to what was seen before a major pullback in late 2020. While short-term bounces can occur, the larger price structure points towards a bearish trend. Support is expected around $2.90-$3.00 and $2.55-$2.62, with resistance at $3.10-$3.20 and $3.40.
Chainlink’s price structure has changed significantly after breaking below $17.50-$18. The current daily chart pattern resembles that of May, which preceded a bearish trend. Resistance is expected at $17.50-$18 and $20, while support is around $15.50. A break below $15.50 could lead to a move towards $13-$13.50.
The Bitcoin dominance remains above a key support level between 60.5% and 61%. This indicates that an altcoin season is not currently underway. If Bitcoin dominance continues to rise, short positions in altcoins might be more favorable. Conversely, a break below this support level would be bullish for altcoins.
Funding rates across most cryptocurrencies have reset to more neutral levels, partly due to short-term bounces clearing out overleveraged short positions. However, this could create room for further bearish price action in the coming week.
