Key Points
- Bitcoin (BTC) faces a potential drop below $61,000 due to weakening support.
- Outflows from US spot Bitcoin exchange-traded funds (ETFs) and the Federal Reserve's decision on interest rates are significant factors.
Bitcoin's price is under threat of falling below $61,000 due to weakening support.
The cryptocurrency's value has been tracking a downward trend, with its lowest point reaching $60,760.
Factors Influencing Bitcoin's Price
Bitcoin's price is currently 17.5% lower than its all-time high, and this downward pressure is attributed to several factors.
One of these is the outflow from the US spot Bitcoin exchange-traded funds (ETFs).
Another significant factor is the Federal Reserve's decision on interest rates, which was due on March 20.
The market is closely watching Fed Chair Jerome Powell's commentary following the Federal Open Market Committee (FOMC) meeting.
According to trading resource The Kobeissi Letter, it is unlikely that the Fed will change rates soon.
However, the market is keenly awaiting guidance following recent events.
Outflows from Bitcoin ETFs
Spot ETFs have experienced a second consecutive day of net outflows, as per data from UK-based investment firm Farside.
Despite the outflow from the Grayscale Bitcoin Trust (GBTC) being lower than the record $642 million from March 19, the low inflows to other ETF products have resulted in lackluster statistics.
Around $500 million has flowed out of spot BTC ETFs in the past two days.
Potential reasons for this slowdown include traders adopting a wait-and-see approach before the FOMC, and the ongoing tax season in the US.
Trading firm QCP Capital warned in its daily bulletin that a second day of net outflows could significantly impact Bitcoin's price strength.
The firm questioned whether inflows from other ETFs could bring the net number to positive, adding that another net negative number could cause support to crack.
