Bitcoin’s price continues to consolidate as market sentiment weakens, with the fear and greed index dropping to the fear zone and the Market Value to Realized Value (MVRV) Z score hitting a three-month low. At last check on Saturday, Bitcoin (BTC) was trading at $97,600, up 1.2%, but remains in a tight range.
Why Bitcoin’s Price Has Stalled
Bitcoin’s stagnant price movement reflects investor caution as market participants await a major catalyst. According to SoSoValue data, demand for spot Bitcoin ETFs among American investors has slowed, leading to over $650 million in net outflows in the last four days.
On-chain analyst Ali Martinez noted that when spot Bitcoin ETFs offload BTC, they create downward price pressure, signal investor outflows, and increase market volatility. These outflows may be driven by redemptions, institutional portfolio shifts, or fund rebalancing. Additionally, arbitrage traders could be taking advantage of price differences between ETFs and Bitcoin’s spot price, adding to the volatility.
Geopolitical and Economic Factors at Play
Bitcoin’s struggles come amid ongoing geopolitical risks and concerns over prolonged high interest rates. Investors fear that President Donald Trump’s proposed tariffs could spark a trade war, leading to market volatility and higher inflation. Recent inflation data showed an increase in the headline consumer inflation rate from 2.9% in December to 3% in January, while the core Consumer Price Index (CPI) rose from 3.2% to 3.3%.
The Federal Reserve’s hawkish stance further dampens investor sentiment. In his testimony to Congress, Fed Chair Jerome Powell signaled that the central bank would maintain current interest rates until inflation shows signs of a sustained decline. Historically, Bitcoin and other high-risk assets tend to underperform in such environments.
Market Sentiment Shifts
Investor sentiment has taken a hit, as reflected in the widely followed fear and greed index, which has plummeted from the extreme greed zone of 90 in 2024 to the fear level of 40. At the same time, the MVRV Z score—a key valuation metric—has dropped to 2.49 from its year-to-date high of 3. An MVRV reading below 3.5 suggests that Bitcoin is undervalued, potentially signaling an accumulation phase by institutional investors.
Additionally, futures open interest has seen a decline, which, alongside a dropping fear and greed index and lower MVRV, may indicate accumulation by smart money investors who are positioning themselves for a future price increase.
Looking Ahead
Despite the current bearish outlook, historical trends suggest that such conditions often precede accumulation phases, where strategic investors take advantage of lower prices. As the macroeconomic landscape evolves, Bitcoin’s next move will likely depend on ETF flows, geopolitical developments, and central bank policies. For now, cautious sentiment prevails, with traders closely monitoring market indicators for signs of the next breakout.
