Bitcoin [BTC] faced significant downward pressure recently, marking a three-month low at $85k amidst changing market dynamics.
The release of the U.S. Consumer Confidence Report triggered a wave of concern among investors, leading to a notable increase in exchange inflows.
According to CryptoQuant’s data, three instances of Bitcoin’s exchange inflow surpassing 5k BTC were recorded in a single day post the unveiling of the U.S. consumer confidence report.
The report highlights a drop in consumer confidence to an eight-month low, fueled by mounting worries over inflation and the implementation of new tariffs under the incumbent administration.
A growing unease among U.S. consumers regarding the impact of tariffs on their purchasing power has heightened fears. Typically, businesses transfer tariff expenses to consumers, aggravating inflation and diminishing disposable income.
The repercussions of these market apprehensions were prominently reflected in Bitcoin’s performance, with the American market experiencing a negative turn post the report, as evidenced by a deteriorating Coinbase premium index.
A negative standing of the Coinbase index indicates a bearish sentiment among U.S. investors, particularly institutional players, who are shedding BTC more than they are acquiring it.
Subsequently, panic selling ensued as depicted by a movement of over 15k BTC to exchanges in response to the report.
Such a notable surge in exchange inflows may signal an impending selling force, with major holders or institutions potentially transferring BTC to exchanges for liquidation purposes.
This influx led to a surge in the exchange netflow, peaking at a monthly high of 8.4k BTC. A surge in netflow turning positive signifies that Bitcoin witnessed more inflows than outflows, hinting at a higher selling pressure.
Implications on BTC
Significantly, the escalating Exchange Inflow point towards a heightened selling pressure on BTC at present.
Observations from CryptoCrypto indicate this mounting selling pressure through the negative shift in the Taker Buy-Sell Ratio, which has sustained in this territory for the past five days.
A prolonged negative state of this metric suggests that Bitcoin holders are divesting, indicating a diminished demand for the cryptocurrency.
In essence, Bitcoin is grappling with strong bearish inclinations as investors pivot towards selling. Therefore, the current conditions place BTC at risk of further declines unless there is an improvement in macroeconomic factors.
Should these conditions persist, Bitcoin could slide to $86k. Conversely, a moderation in external influences could pave the way for Bitcoin’s recovery and reclamation of $90k.