On-Chain Analysis: High Leverage Funds Reenter BTC Amid Divergent Market Sentiment

Bitcoin declined toward $90,000 on Friday, encountering resistance amid fading institutional demand. Spot ETF flows showed net withdrawals of $431 million this week, highlighting reduced institutional investor participation. Despite this, corporate demand remained strong, with Michael Saylor's company purchasing 1,287 BTC, reinforcing its aggressive accumulation strategy.

Meanwhile, the BTC market structure is transitioning toward selective re-risking and rebuilding, as outlined in a recent report. Clearing supply overhang levels remains crucial for a directional price move according to analysis. Geopolitical tensions, such as the recent Venezuela crisis, have not significantly disrupted Bitcoin trading patterns.

CryptoQuant Exchange Netflow data indicated stable trading activity, with no large-scale inflows or panic selling observed. This resilience suggests that the market has become more adaptive to geopolitical shocks since 2023.

What Is Driving BTC's Mixed Institutional Flows?

Institutional demand for Bitcoin waned midweek, despite a strong opening. SoSoValue reported that US-listed BTC spot ETFs recorded $697 million in inflows on Monday, followed by three days of outflows totaling $1.12 billion, resulting in net withdrawals. Continued outflows could lead to further price corrections.

Corporate demand, however, remains robust. Strategy Inc. increased its Bitcoin holdings and USD reserves, showing continued confidence in BTC as a long-term asset. This trend is echoed by institutions like Morgan Stanley, which filed S-1 registration statements for spot Bitcoin and Solana ETFs.

How Are Geopolitical Events Affecting BTC Markets?

The recent Venezuela crisis brought geopolitical risk back into focus. On Saturday, the U.S. conducted a military strike, capturing President Nicolás Maduro. Despite the potential for volatility, BTC traders showed little reaction. Exchange Netflow data showed no significant changes following the event.

Historical events like the Russia-Ukraine conflict and Middle East tensions have influenced Bitcoin prices. However, the current market appears more resilient, with initial reactions fading quickly. This suggests that Bitcoin's market psychology is evolving, with investors adopting a more cautious rather than fearful stance.

What Are the Key Technical Levels for BTC?

Bitcoin is consolidating around the 100-week EMA at $86,025, currently trading near $90,300 according to analysis. If this support level holds, BTC could move toward the 50-week EMA at $97,631. Conversely, a close below $90,000 could trigger a correction toward $85,569.

The RSI on the daily chart points downward, indicating fading bullish momentum. If the RSI remains below the neutral level of 50, a sharp correction could follow. A bullish scenario is contingent on BTC breaking above $92,497 and confirming the breakout with a 4-hour candle close.

What Regulatory Developments Are Shaping the Market?

New legislation in the U.S. and U.K. is influencing the crypto market structure. The Senate Banking Committee released a bipartisan proposal allowing stablecoin rewards for customers, a move that could benefit platforms like Coinbase.

In the U.K., the Financial Conduct Authority announced it would begin accepting crypto applications in September under new regulatory oversight. These developments indicate a broader push toward formalizing crypto regulation, which could enhance investor confidence and market legitimacy.

What Macroeconomic Factors Could Influence BTC Next?

The U.S. Nonfarm Payrolls (NFP) data for December is scheduled for release on Friday, which could drive volatility in the USD and BTC. Fabian Dori of Sygnum Bank noted that the Fed's policy direction will be closely watched, particularly in light of recent inflation data and interest rate cuts.

A softer labor market could support easing monetary policy, favoring higher-beta assets like Bitcoin. However, unexpected hiring or wage growth could signal a more hawkish stance, increasing selling pressure on BTC. Traders are advised to monitor these macroeconomic signals as they could influence market direction.

What Should Investors Watch for in the Coming Weeks?

Traders should focus on key levels such as $90,617 (support) and $92,497 (resistance) according to analysis. A break above resistance or below support would signal the next phase of BTC's movement. Volume and candle patterns, such as bullish engulfing or bearish confirmation, will also be crucial in validating price actions.

Regulatory updates from the Senate and U.K. FCA could provide additional clarity for crypto investors. Meanwhile, macroeconomic reports and ETF approvals may act as catalysts for directional moves. Investors are advised to maintain disciplined risk management and closely monitor technical and regulatory developments.

What Policy Implications Emerge from the Market Structure Bill?

The U.S. Senate Banking Committee's proposal allows stablecoin rewards under certain conditions, exempting loyalty programs and incentive structures. This could encourage platforms to continue offering customer benefits while avoiding regulatory scrutiny.

The House passed its own market structure bill last year, shifting oversight to the Commodity Futures Trading Commission (CFTC). This reflects ongoing efforts to define the regulatory landscape for digital assets, with implications for how stablecoins, DeFi, and other crypto innovations will be governed.

Investors should monitor how these bills progress and their potential impact on market liquidity and participation. A clear regulatory framework could attract new entrants and institutional capital, further stabilizing and legitimizing the crypto markets.