Bitcoin News Today: Bitcoin Slumps Below $86K as ETF Outflows and Fed Moves Shape Market Jitters

Bitcoin (BTC) Faces Renewed Pressure as the Price Continues to Decline

Bitcoin (BTC) faces renewed pressure as the price continues to decline, trading below $86,000 on Tuesday. The cryptocurrency is in its fifth consecutive day of losses, testing key support levels. Market sentiment is mixed, with institutional investors displaying divergent strategies in the current bearish environment according to analysis.

Spot Bitcoin Exchange Traded Funds (ETFs) are experiencing significant outflows, with $357.69 million leaving the funds on Monday alone. This is the largest single-day outflow since November 20. If the trend persists, further price corrections for Bitcoin could follow.

In contrast, some firms are bucking the trend. Strategy Inc. (MSTR) added to its Bitcoin holdings on Monday, purchasing 10,645 BTC for $980 million. This follows a similar purchase of 10,624 BTC earlier in the week, reinforcing the company's long-term commitment to the digital asset.

Mixed Institutional Sentiment

Institutional demand for Bitcoin has started the week on a weak note. The outflows from Spot Bitcoin ETFs indicate a lack of confidence among certain investors, especially as the price remains under pressure. Continued outflows could exacerbate the ongoing price correction.

However, not all institutional actors are pessimistic. Strategy Inc.'s aggressive accumulation of Bitcoin highlights the disparity in investor sentiment. The firm's actions are a clear signal of its belief in Bitcoin's long-term value despite near-term volatility.

Extreme Fear in the Market

Market fear is reaching new levels, as evidenced by the Fear and Greed Index dropping to 11 on Tuesday. This figure is close to the end-of-November lows, signaling a sharp shift toward caution among traders. The index is a key barometer of market sentiment and indicates heightened risk aversion.

The index measures six key pillars, including volatility, market volume, social media activity, and Google Trends data. With volatility and volume increasing, and social media activity declining, the market appears to be in a state of heightened anxiety according to data.

Signs of Near-Term Liquidity Support

Despite the bearish environment, there are some signs of optimism for Bitcoin in the near term. The Treasury General Account (TGA) has dropped to $78 billion over the last week, marking the largest liquidity injection since June. This decline is significant because it represents cash flowing into the financial system, which can boost liquidity.

The Federal Reserve is also contributing to improved liquidity conditions. The central bank is injecting $40 billion through bond purchases and reinvesting $14.4 billion in principal payments from Mortgage-Backed Securities (MBS) to buy Treasury bills. These measures are expected to lower borrowing costs and encourage risk-on behavior in the financial markets.

Technical Indicators Suggest Further Correction

Bitcoin's recent price action paints a bearish picture. The asset has fallen nearly 7% since being rejected from a key descending trendline drawn from highs since early October. This trendline coincided with the 61.8% Fibonacci retracement level at $94,253, reinforcing its significance as resistance.

If Bitcoin continues to decline and closes below $85,569 on a daily basis, it could extend the correction toward the $80,000 level. The RSI on the daily chart is at 36, indicating bearish momentum. Additionally, the MACD indicator showed a bearish crossover on Tuesday, further supporting the negative outlook.

Implications for Investors

The current market environment is challenging for investors. While Bitcoin's price remains under pressure, the improving liquidity conditions in the U.S. could provide a floor for further declines. Investors should closely monitor the key support levels, including the $85,569 and $80,000 levels, as these could dictate the near-term direction of the market.

At the same time, the actions of institutional players like Strategy Inc. suggest that some market participants remain bullish on Bitcoin's long-term prospects. These developments highlight the divergence in sentiment within the investor community.