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These economic factors could put Bitcoin in a “slow bleed environment” (Bitfinex)
With risky assets in the financial sector currently appearing vulnerable, market experts have identified economic factors that could cast Bitcoin (BTC) in a similar light and push it into a “slow bleed environment.”
According to a Bitfinex Alpha relationship, risky assets are starting to look vulnerable amid concerns that US authorities may not cut interest rates soon. These assets, including BTC, were dented last week after regulators released stronger-than-expected jobs data. However, BTC has proven resilient and has gracefully handled the impact of the data thanks to continued inflows into the US spot Bitcoin exchange-traded fund (ETF) market.
Next meeting and report in the United States
Since May 13, spot Bitcoin ETFs in the US have been on a 19-day streak of inflows, which was broken just yesterday (June 10). Continued inflows played a significant role in supporting the price of bitcoin on Friday after the digital currency fallen more than three thousand dollars in an hour.
Analysts said that while ETF inflows are strengthening bitcoin price, the trend may be broken in the next week due to inflation signals that may emerge after the US Consumer Price Index report. Additionally, the upcoming US Federal Open Market Committee interest rate meeting could also impact ETF flows.
“The results of these short-term economic signals could impact continued inflows and put BTC in a variable or slow-bleeding environment,” Bitfinex said.
In addition to the upcoming meeting and report, funding rates are currently elevated in the bitcoin perpetual futures markets, indicating that traders are paying a premium to open long positions. Rising CME Bitcoin futures open interest (OI) and ETF inflows suggest traders are taking advantage of the arbitrage opportunity between the futures and spot markets.
Bitcoin OI on major cryptocurrency exchanges reached an all-time high of $36.8 billion on June 6, and despite Friday’s price correction, OI is currently above $36 billion. Bitfinex compared Friday’s collapse to a flow of leverage, which wiped out many long leveraged altcoin positions and neutralized funding rates.
Bitcoin fails to break out of the high range
Although positive flows from ETFs offset the pressure on BTC, the asset was unable to break out of its high range. Before Friday’s collapse, BTC rallied to a high above $71,500 for the first time since reaching the minimum deviation of the sub-$57,000 range in May.
While Bitfinex does not expect a significant drop immediately, Bitcoin’s inability to break out of highs remains a concern.