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Bitcoin Revisits $95k as US Data Bolsters the Fed’s Rate Path Outlook
On Thursday, bitcoin (BTC) dropped to the $95k level for the first time since December 11. Better-than-expected US labor market and GDP numbers supported the Fed’s more hawkish Fed rate path outlook, weighing on riskier assets.
US initial jobless claims dropped from 242k (week ending December 7) to 220k (week ending December 14), signaling a resilient labor market. A tight labor market may boost wage growth, fueling consumer spending and demand-driven inflation. A higher-for-longer Fed rate path may raise borrowing costs, impacting demand for BTC and other riskier assets.
The US economy also ran hotter than expected in Q3, supporting the Fed’s case for fewer rate cuts.
Will the Fed Rate Path End the US BTC-Spot ETF Market’s Inflow Streak?
On Wednesday, December 18, the US BTC-spot ETF market extended its inflow streak to 15 sessions, the longest since February. BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) continued to ensure the winning streak stayed alive, with net inflows of $359.6 million. Excluding IBIT, the US BTC-spot ETF market had net outflows of $84.3 million.
However, flow trends for the Thursday session suggest the BTC-spot ETF market will end its winning streak. According to Farside Investors:
- Fidelity Wise Origin Bitcoin Fund (FBTC) saw net outflows of $128.2 million.
- Grayscale Bitcoin Mini Trust (BTC) reported net outflows of $188.6 million.
- ARK 21Shares Bitcoin ETF (ARKB) had net outflows of $108.4 million.
Excluding iShares Bitcoin Trust (IBIT), the US BTC-spot ETF market saw total net outflows of $671.9 million, potentially the largest since launching on January 11, 2024.
The US BTC-spot ETF market’s flow trends remain crucial for BTC’s supply-demand dynamics. Thursday’s outflows could leave BTC under selling pressure.
Bitcoin Price Outlook
On Thursday, December 19, BTC declined by 2.4%, following Wednesday’s 5.61% slide, closing at $97,704.
Near-term BTC price trends will hinge on US economic indicators, US BTC-spot ETF flows, SBR-related news, and US government BTC sales. A significant BTC sale by the US government and BTC-spot ETF market outflows could reignite oversupply fears, potentially pulling below $95,000. Conversely, BTC-spot ETF market inflows and progress toward an SBR may drive BTC toward $110,000.
Later today, the US Personal Income and Outlays Report will likely influence sentiment toward the Fed’s rate path. Higher-than-expected Core PCE Price Index numbers could bolster expectations of fewer 2025 Fed rate cuts, potentially fueling BTC-spot ETF outflows.