Bitcoin Price Forecast: BTC slips below $90,000 amid profit-taking, ETF outflows

Fading institutional demand

Institutional demand for BTC has weakened so far this week. SoSoValue data show that Bitcoin spot ETFs recorded an outflow of $486.08 million on Wednesday, the second consecutive withdrawal this week and the largest single-day outflow since November 20. If these outflows continue and intensify, BTC could extend the ongoing correction.

Total Bitcoin Spot ETF net inflow daily chart. Source: SoSoValue

Some holders realized profits, increasing the downward pressure

Santiments’ Network Realized Profit/Loss (NPL) metric indicates that some BTC holders are realizing gains.

As shown in the graph below, the NPL experienced spikes on Monday and Wednesday, the highest profit booking activity since December 12. These spikes indicate that holders are, on average, selling their bags at a significant profit, thereby increasing selling pressure.

Bitcoin Price Forecast: BTC could extend pullback if it closes below $90,000

Bitcoin price closed above the upper consolidation range of $90,000 on Saturday. BTC rose nearly 4%, retesting the 61.8% Fibonacci retracement level (drawn from the April low of $74,508 to October's all-time high of $126,199) at $94,253 on Monday. However, the rally paused as BTC restested this level on Tuesday, and the price declined 2.54% the next day. As of Thursday, BTC is slipping below $90,000.

If BTC continues its pullback and closes below $90,000 on a daily basis, it could extend the decline toward the next support level at $85,569.

The Relative Strength Index (RSI) on the daily chart is poised to slip below the neutral 50 level, signaling a fading bullish momentum. If the RSI remains below the neutral level, BTC could correct sharply.

However, if BTC finds support around the $90,000, it could extend the recovery toward the key resistance level at $94,253.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.