Bitcoin price fell below $82,000, BlackRock's funds joined the sell-off

Key Facts

Data showed that the U.S. spot Bitcoin ETF recorded a net outflow of $484.9 million on Wednesday, the largest outflow since June 25. Among them, BlackRock's IBIT products contributed $207.7 million in outflows.

As of 9:45 a.m. Eastern Time on Thursday, Bitcoin was trading at US$82,019, down 1.2% in 24 hours. Previously, the price of Bitcoin had fallen to $81,732, below its September 28 low.

Bitfinex linked the market recovery to fund re-buying and key support of $81,300, while FxPro said that forced liquidations by leveraged buyers could push Bitcoin towards $76,000.

Fund flows and market dynamics

The U.S. spot bitcoin fund lost $484.9 million on Wednesday, setting the largest single-day net outflow since June 25. BlackRock's IBIT products had offset net redemptions from rival funds for five consecutive trading days, but this time led the decline in selling. Currently, Bitcoin's trading price is only hovering above the US$81,300 recovery key point pointed out by Bitfinex.

As U.S. Treasury yields remain at decades-high and Federal Reserve minutes show that most officials believe another interest rate hike this year is possible, funds have turned to sell. IBIT's $207.7 million outflow was its largest since July, removing the steady buyer power that had been used to offset counterparty redemptions. Subsequently, Bitcoin fell below its September 28 low on Thursday.

Bitfinex pointed out that in this price range, holders buy less and therefore lack sufficient support. "As the number of capital-protected defense clusters serving as support decreases in the region, prices may quickly break through this range." The exchange's research team wrote on Wednesday.

What changed on Wednesday? Rising yields and hawkish Fed attitude

Bitcoin has fallen on Tuesday as crude oil and government bond yields climbed. On Wednesday afternoon, the Federal Reserve released minutes of its September interest-rate meeting, which ended with an interest rate increase.

The minutes showed that most participants "assessed that a further increase in the target range of the federal funds rate by the end of the year may be appropriate."

Oil prices added to market pressure on Thursday. According to CoinDesk, Brent crude prices rose to more than $104 a barrel after the White House asked the Pentagon about options for a strike on Iran.

In addition, U.S. trading hours are also unfavorable for Bitcoin. Glassnode data shows that since the breakthrough on September 21, the U.S. trading hours have been a net seller of Bitcoin.

Who is selling? BlackRock IBIT joins other funds

Until Wednesday, IBIT was a pillar of the group. Bitfinex found that in the week ending October 6, IBIT continued to absorb money while rival funds lost money.

On Wednesday, no U.S. spot bitcoin funds achieved net inflows. Data shows that Fidelity's FBTC and ARK's ARKB are closely behind IBIT, with both outflows exceeding $100 million.

These ETFs absorbed $2.65 billion in funding in September and turned the annual cumulative figure from negative to positive. However, October is currently at a loss.

Where is the support level? Until Bitfinex's $81,300 hub, weaker

holders tend to defend prices where they buy. Bitfinex cited on-chain data and found that the price at which a large amount of bitcoins finally changed hands was only above $84,000, with relatively little below it. Checkonchain's estimates also show that Bitcoin is trading at less than the average cost of holding a position for U.S. fund buyers, which is approximately $84,300.

Bitfinex has set three conditions for recovery: net fund purchases, profit-taking by short-term holders, and prices remaining above $81,300. On the day his report was released, the first condition was not fulfilled.

What can turn the situation around? Fund purchases above $84,000

Some of the on-chain readings still point in a positive direction. CryptoQuant contributor MorenoDV_wrote on Thursday that a measure of whether a coin is profitable sends a signal that has signaled recovery in the past.

The September Consumer Price Index report will be released on October 14, the next reading of inflation data and the last before the Federal Reserve's October 28 decision.

FxPro views the US$80,500 to US$81,500 area as a key point to test market movements: to see whether buyers who have missed the market enter or whether buyers who have used leverage are forced out.

Alex Kuptsikevich, chief market analyst at FxPro, told CoinDesk: "In the former scenario, we can expect a quick re-test of highs; in the latter scenario, there could be a sharp, high-speed elevator-like decline to $76,000 (recent lows) or $72,000 (200-day moving average)."