Bitcoin News Today: Bitcoin Stumbles Below $89K as ETF Outflows and U.S. Sellers Weigh on Momentum

Bitcoin, the leading cryptocurrency, continued its struggle against a recurring pattern of U.S. trading hour selloffs as it hovered near $88,400 on Friday. The price had briefly exceeded $89,000 overnight, but sellers quickly pushed it back down during U.S. market hours, reinforcing a week-long trend of failed breakouts. Investors are closely watching whether this cycle can be broken amid growing institutional buying and shifting macroeconomic dynamics.

Altcoins also showed a modest rebound overnight, with Ethereum (ETH), Solana (SOL), and SUI leading the charge, rising more than 5% from Thursday's lows. U.S. equities were in strong form, contributing to a positive sentiment that extended to crypto-related stocks such as BitMine and Galaxy. The Nasdaq, buoyed by gains in AI-related stocks like Oracle and AMD, added to the optimism.

Digital asset stocks followed the broader market's upward trajectory, with Ethereum treasury firm BitMine surging nearly 8%. Strategy, the largest corporate Bitcoin holder, also gained more than 3%, pushing its multiple to net asset value (mNAV) to 1.09.

The optimism was further amplified by news from BitDigital, which saw a 10% jump after securing a 10-year, 40MW colocation agreement.

Why the Standoff Happened

Bitcoin's price has been repeatedly capped around the $89,000 level during U.S. trading hours, as sellers consistently reassert control within minutes or hours of a potential breakout. This standoff has persisted for several days, despite institutional accumulation efforts and a softer-than-expected U.S. inflation report. The latest Consumer Price Index (CPI) data, which showed a 2.7% year-on-year increase in November, has fueled speculation that the Federal Reserve may cut interest rates sooner than anticipated, potentially easing pressure on risk assets.

However, Bitcoin's price action is also being affected by ongoing outflows from spot Bitcoin ETFs. According to SoSoValue, these funds recorded a net outflow of $338.81 million by Thursday, marking the largest weekly outflow since November 21. If this trend continues, it could lead to further downward pressure on Bitcoin's price.

What Analysts Are Watching

Market participants are monitoring several key developments that could influence Bitcoin's near-term trajectory. The Fear and Greed Index, which measures investor sentiment, dropped to 16 on Friday, indicating a deep risk-off phase in the crypto market. This aligns with the recent price declines, ETF outflows, and weak momentum seen in the market.

Institutional buying remains a key factor to watch. Strategy Executive Chairman Michael Saylor recently announced the purchase of an additional 10,645 Bitcoin for $980 million, following a similar acquisition the previous week. This aggressive accumulation strategy signals long-term confidence in Bitcoin despite ongoing volatility.

The U.S. equity market's strength is another factor that could provide indirect support for Bitcoin. A stronger Nasdaq and gains in AI-related stocks such as Oracle and AMD have created a positive backdrop for risk-on assets. This environment could help mitigate some of the selling pressure Bitcoin has faced during U.S. trading hours.

Risks to the Outlook

Bitcoin's volatility has been exacerbated by leveraged trading activity, with open interest rising since early December. This increase in speculative positions has contributed to cascading liquidations, particularly during sharp price movements. For example, over $400 million in crypto positions were liquidated in the past 24 hours, with Ethereum seeing significant losses from long positions.

The impact of leveraged trades was further highlighted by a sharp two-hour price swing on December 17, which saw Bitcoin rise and fall by roughly $3,000 within a short window. Analysts such as Bull Theory attributed this to a short squeeze followed by a long squeeze, with the speed and scale of the move indicating aggressive trading.

Regulatory developments and macroeconomic factors are also adding to the uncertainty. The U.S. Federal Reserve's upcoming decisions and potential interest rate cuts are critical to watch, as they could influence liquidity conditions and investor behavior. Additionally, regulatory clarity in the form of the proposed Clarity Act could provide long-term support for the crypto market.

What This Means for Investors

Investors are being urged to remain cautious amid the ongoing volatility and structural selloffs during U.S. trading hours. Bitcoin's ability to maintain gains above key support levels will be a critical test for bulls, as a break below the $85,000 level could extend the decline. On the other hand, a successful breakout above $89,000 could signal a shift in momentum and provide much-needed relief for the market.

Positioning and sentiment metrics are also key for investors to consider. The Fear and Greed Index, currently in a deep risk-off phase, suggests that investors are still on the sidelines. However, corporate accumulation and potential liquidity injections from U.S. government spending could provide a floor for Bitcoin's price in the near term.

As the market approaches the pre-holiday weekend, investors are advised to stay attuned to on-chain metrics and macroeconomic developments. The coming days will be pivotal in determining whether Bitcoin can break free from its pattern of U.S. trading hour selloffs and establish a more stable price trajectory.