Key Insights:
- Bitcoin price on track to close the week in the red after undoing last week’s gains, but is still trading above $90,000.
- Bitcoin ETFs contributed a substantial amount to the weekly outflows, amounting to $680 million net.
- Treasury companies, including MicroStrategy and A16Z, reveal plans to buy more BTC.
Bitcoin price is closing the week in the red, after its latest bullish attempts in the first week of January were shot down. This occurred amid rising geopolitical tensions, which likely influenced market sentiment over the last seven days.
Bitcoin price exchanged hands at $90,593 at press time, which was equivalent to a 0.99% drop from its weekly opening price. BTC price has also dropped by almost 5% from its weekly high.
The bearish outcome was noteworthy because the cryptocurrency started off on a bullish leg this month. As a result, many investors accumulated, anticipating further upside.
The bearish BTC price action this week reflected weak demand observed among the whale cohort in the last 7 days. The cryptocurrency, therefore, struggled to maintain the previous week’s rally.
Bitcoin ETF Flows Contributed to the Bearish Weekly Outcome
The Bitcoin ETF segment played a big part in the Bitcoin price retreat after almost clocking $95,000 earlier this week. Institutions have maintained a continuous streak of outflows since Tuesday.
In total, Bitcoin ETFs had $680 million in total net flows during the week, after selling over $1.38 billion worth of BTC. The net flows were watered down by $697 million in inflows on Monday.
The negative weekly net Bitcoin ETF flows aligned with the rising geopolitical tensions this week. This outcome could signal that the markets are on edge, with sentiment leaning towards caution.
It was perfectly reflected in the weekly drop in the Bitcoin Fear and Greed Index. Sentiment previously pushed as high as 44 points but has since cooled to 25 points, which is back into extreme fear territory.
These observations were noteworthy because they offered a clearer glance at how Bitcoin and the crypto market in general reacted to the US-Venezuela situation.
This also suggests that the markets could continue to lag if the geopolitical tensions worsen in the coming few days. It is worth noting that BTC’s overall reaction was relatively subdued, given that Bitcoin price stuck above $90,000.
This could be because Bitcoin ETFs represent a small fraction of the overall demand scope. On-chain data also revealed that long-term holders were among the biggest contributors to the sell pressure.
Treasury Companies Prepare to Re-Enter with Aggressive Positioning
Some of the key institutional investors, especially those building up BTC treasuries, are preparing to buy. Venture capital firm A16Z has just revealed that it recently raised $15 billion, with most of the funds to be invested in AI and crypto.
The company’s official statement did not go into details of how much will be invested in BTC. However, it did acknowledge that AI and crypto will play a part in advancing America’s interests.
MicroStrategy has also been quite open about its aggressive investments in Bitcoin. Its CEO, Michael Saylor, recently revealed that he intends to continue injecting more money into the digital asset, even as Bitcoin price continues to rally.
Saylor stated that he intends to inject over $70 billion into Bitcoin as part of securing more of the supply. He revealed that he plans to push his holdings to over 7% of the Bitcoin supply.
Strategy aims to keep buying even when the BTC price pushes above $1 million. This may boost long-term confidence, considering that the cryptocurrency is trading at a fraction of that price.