As Bitcoin continues to grapple with a market pullback of 1.08%, the Crypto Fear and Greed Index has nosedived to 35, signaling an increasingly fearful and uncertain market sentiment. Despite its best efforts to maintain a steady grip around the $97,000 mark, Bitcoin’s momentum appears shaky, with a market valuation just below the $2 trillion mark.
A recent halt in institutional backing has raised concerns about a more profound correction, despite the potential morning star pattern hinting at a possible bullish comeback. The question on the lips of many is whether a resurgence in institutional demand could spur the price of Bitcoin back to the $106,000 mark.
In the daily chart, Bitcoin’s price decline is testing a vital local support trendline. The formation of a doji candlestick yesterday and an intraday recovery of 1.13% today suggests a morning star reversal might be on the horizon.
At present, Bitcoin’s price is consolidating between the 50-day and 100-day EMA lines, prompting caution among traders. However, the recent pullback has sparked a bearish trend in the MACD and signal lines. The momentum indicator is currently signaling a sell, even though Bitcoin is perched at a key support level. This generally contradicts the conventional ‘buy at support, sell at resistance’ strategy.
Nevertheless, the morning star pattern is bolstering the chances of a bullish reversal rally, which could potentially drive a broader market recovery.
Looking at the bigger picture, the local support trendline forms an ascending triangle pattern, with the overhead ceiling set at $106,000. If Bitcoin can sustain support within this pattern, it could be in for a short-term market recovery. This scenario could see Bitcoin testing the overhead resistance, which could potentially project a nearly 10% upside. However, if the bulls fail to maintain dominance at this level, Bitcoin could face a significant crash.
Institutional activity on February 6 saw the daily total net inflow of U.S. Bitcoin spot ETFs remain in the negative. The Grayscale BTC Mini Trust was the lone buyer, with an inflow of $5.15 million. However, Fidelity offloaded a staggering $103.25 million, while Grayscale BTC Trust sold $42.21 million, indicating a diverging viewpoint between the two Grayscale trusts.
At present, the Grayscale BTC Trust has seen a cumulative net outflow of $21.91 billion, indicating continued selling pressure. In contrast, the largest Bitcoin ETF, BlackRock, with a total net asset value of $56.252 billion, has maintained a neutral stance with zero net flow. It remains to be seen how these institutional activities will shape the future trajectory of Bitcoin, but for now, the market continues to watch with bated breath.
