Bitcoin's (BTC) recent rally above the key psychological threshold of $90,000 proved short-lived

Bitcoin (BTC) staged a near 10% recovery to above $95,000 on March 2 before forming a double-top chart pattern around $94,200

Bitcoin (BTC) price slid further on March 2 after failing to sustain above the key psychological threshold of $90,000.

As institutional investors appear to be reducing their holdings in cryptocurrency markets and macroeconomic uncertainties loom, analysts are now assessing what’s next for Bitcoin and its price action in 2024.

Bitcoin price drops below $90,000 amid ETF outflows and macro woes

Bitcoin price slid nearly 10% to reach lows of around $81,400 on March 1 after forming a double-top chart pattern.

A double-top formation occurs when an asset reaches a peak price on at least two occasions, setting up a potential reversal. In Bitcoin’s case, the crypto hit a high of $94,200 before evening out to form a double-top pattern around the daily chart.

BTC/USD, 1-day chart, double top. Source: TradingView

Key factors that may be contributing to Bitcoin’s recent slump include the US spot Bitcoin exchange-traded funds (ETFs) still reporting outflows, and broader macroeconomic worries, said Ryan Lee, chief analyst at Bitget Research.

The US spot Bitcoin ETFs are now seeing their fourth consecutive week of net negative outflows after reporting over $2.6 billion in cumulative net outflows during the last week of February, Sosovalue data shows.

Bitcoin ETF net flows, weekly chart. Source: Sosovalue

“The remarkable bull run in the first quarter of 2024, which saw Bitcoin rally more than 70% from its 2024 low, is likely coming to an end due to several key factors,” said Lee.

“Firstly, the US spot Bitcoin ETFs, which played a crucial role in fueling Bitcoin’s rally, are now seeing their fourth consecutive week of net negative outflows. According to Sosovalue, the ETFs reported over $2.6 billion in cumulative net outflows during the last week of February.”

According to Lee, the Bitcoin ETFs had a record-high inflow of over $10 billion in January and February. However, the inflows have now reversed, which could factor into Bitcoin’s price action moving forward.

The crypto market is also still recovering from the $1.4 billion Bybit hack, which occurred on February 21. The hack was the largest in crypto history.

Greater macroeconomic worries may also be impacting Bitcoin’s price, with rolling 12-month US consumer price index (CPI) inflation remaining elevated at 3.7% in January, higher than the 3% in December.

Despite the slight deceleration in the rate of price increases, the sticky inflation is still a concern for the Federal Reserve, which may keep interest rates higher for longer.

Furthermore, the US is planning to impose tariffs on goods from Vietnam in an effort to deter Vietnam from serving as a route for goods subject to tariffs from China to enter the US.

The tariffs on Vietnamese goods are set to take effect on March 26, and they will apply to a range of products, including bicycles, furniture, and vinyl flooring.

The tariffs are part of a broader trade dispute between the US and Vietnam. The US has accused Vietnam of engaging in unfair trade practices, such as undervaluing its currency and setting up trade barriers against US companies.

Vietnam has denied these accusations and maintains that its trade practices are in accordance with international law.

Finally, the Chinese government has recently announced plans to phase out the production and use of single-use plastic bags by the end of 2025.

The move is part of China’s broader efforts to reduce pollution and promote environmental sustainability.

China is one of the world’s worst plastic polluters. Every year, the country produces millions of tons of plastic waste, much of which ends up in landfills or in the ocean.

The Chinese government has been taking steps to reduce plastic pollution in recent years. In 2020, the government banned the use of disposable plastic chopsticks in food delivery services.

The new initiative to phase out single-use plastic bags is a significant escalation of these efforts. It is also a key part of China’s goal to achieve carbon neutrality by 2060.

Institutions may be reducing their crypto investments

Institutions may be reducing their investments in cryptocurrency markets amid the recent downturn and broader macroeconomic headwinds.

According to Soken, which tracks institutional capital flows in cryptocurrencies, major institutional investors have pulled out a staggering $2.6 billion from US Bitcoin ETFs alone in the last four weeks.

According to Soken data, the total net outflows from US Bitcoin ETFs in the last week of February were an astounding $2.56 billion.

Bitcoin ETF net flows, weekly chart. Source: Sosovalue

This marks the fourth consecutive week of outflows from these products, suggesting a potential shift in institutional sentiment.