Bitcoin ETF Inflows Rebound with $192.3 Million as BTC Stabilizes Above $65K

On October 23, investors in BlackRock's IBIT seized the opportunity to capitalize on Bitcoin's more than 3% decline, contributing $317 million in inflows as the cryptocurrency tested a critical support level at $65,000.

Bitcoin experienced significant downward pressure, sliding 3.3% to close at $66,649, in contrast to a 0.12% gain in the previous session. After hitting a session low of $65,161, BTC found support and managed to recover above the $66,000 mark.

The broader cryptocurrency market mirrored this decline, shedding 1.45% and bringing the total market capitalization to $2.242 trillion. The drop was driven by shifting investor sentiment amid concerns over the upcoming U.S. Presidential Election and the Federal Reserve's monetary policy direction.

As risk assets like Bitcoin faced selling pressure, the Nasdaq Composite Index fell by 1.60%, and 10-year U.S. Treasury yields surged to 4.26%, the highest level since July. This signaled strength in the U.S. economy, complicating expectations for multiple Federal Reserve rate cuts in Q4 2024.

U.S. Presidential Election and Market Impact

With the U.S. Presidential Election on the horizon, uncertainty is further straining investor sentiment. Recent polls show Vice President Kamala Harris leading former President Donald Trump by a narrow 1.7-point margin, though Trump has significantly closed the gap from an earlier 3.7-point deficit.

Despite Harris' lead, betting platform Polymarket gives Trump a higher chance of victory, at 59.7% compared to Harris' 40.4%. A Trump presidency could bring inflationary pressures, potentially prompting a more hawkish stance from the Federal Reserve. While this might dampen demand for riskier assets like Bitcoin, Trump's crypto-friendly policies could stimulate longer-term interest in the digital asset.

Spot Bitcoin ETFs Drive Recovery

In spite of the macroeconomic uncertainties, Bitcoin rebounded from the $65,000 support level, bolstered by renewed inflows into spot Bitcoin ETFs, particularly BlackRock’s IBIT. Following a previous day of outflows totaling $79.1 million, due to investor concerns about the sustainability of Bitcoin's rally, the ETFs saw a turnaround.

On October 23, the 12 spot Bitcoin ETFs recorded net inflows of $192.31 million, with BlackRock's IBIT accounting for the majority at $317.47 million. This marked the fourth instance in six trading days where the fund attracted over $300 million in inflows, bringing its total net inflows to over $23 billion as of October 21.

Grayscale's Bitcoin Minit Trust also added to the positive sentiment with $4.71 million in inflows. In contrast, other ETF products, including ARKB, BITB, and VanEck, faced collective outflows of $129.8 million, indicating a more cautious approach from some investors.

Technical Outlook for Bitcoin

Despite the price dip on Wednesday, Bitcoin remains above key technical levels, including the 50-day and 200-day exponential moving averages, reinforcing bullish signals. A breakout above the $69,000 resistance level and the October 21 high of $69,402 could pave the way for a move towards the psychological $70,000 mark. Should Bitcoin breach $70,000, bulls may target the all-time high of $73,808.

Conversely, a drop below $66,500 could reignite bearish momentum, bringing the critical $65,000 support level back into play. A further decline below $65,000 may open the door for a deeper correction, with $64,000 as the next key support level.

With a 14-day Relative Strength Index reading of 60, Bitcoin has the potential to reach $70,000 before nearing overbought conditions.

As of the latest update, Bitcoin was up 0.5%, trading at $67,345.