Bitcoin clings to key support level as weekly US spot ETF outflows hit $1.8B and Fed rate hike bets mount: analysts

Bitcoin (BTC) is trading around $60,000, pinned just above the key support level that analysts have been watching, as last week's $1.79 billion in U.S. spot BTC exchange-traded outflows added to a macro backdrop that continues to tilt against risk assets.

Spot Ethereum (ETH) ETFs recorded $273 million in outflows over the same period, extending their run of consecutive weekly outflows to seven, according to SoSoValue data. Spot XRP (XRP) ETFs attracted $22.99 million in net inflows, while spot Hyperliquid (HYPE) ETFs drew $111 million.

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Options positioning

Bitcoin had briefly recovered to around $64,000 early last week as geopolitical tensions eased, but selling pressure built into the latter part of the week, pushing it back below the psychologically significant $60,000 level, the Derivatives Trading Desk at Laser Digital wrote in a note Monday. Ethereum continued to underperform Bitcoin throughout, the desk added.

Implied volatility has also been grinding higher as traders pay up for downside protection, particularly in BTC puts at the $55,000-$58,000 range targeting July expiry, analysts from QCP Capital noted.

Risk reversals remain heavily skewed toward puts, with the Singapore-based trading firm pointing to BTC and ETH trading just above key support levels around $58,000 and $1,500, respectively.

Sizeable buying in BTC July 17 $64,000 calls over the weekend suggested some traders were also positioning for a bounce from current levels, QCP added.

The Fed and macro headwinds

Rate markets are now pricing close to 1.5 additional Fed hikes despite limited change in the broader backdrop, a significant swing from the two cuts that were priced before the Middle East conflict, Laser Digital's derivatives desk wrote.

The desk characterized the repricing as potentially excessive unless the Fed is deliberately leaning hawkish to rebuild its inflation-fighting credibility.

Kyle Rodda, senior financial market analyst at Capital.com, pointed to Apple's recent decision to hike prices on a range of its products as evidence that AI-driven cost pressures are beginning to hit consumers directly as well.

The AI boom is generating profits and investment that underpin economic growth, Rodda wrote, but the greater the industry's profitability, the stronger the price pressures central banks may ultimately need to tackle with rate hikes.

Last week's PCE data, while not as bad as feared, still showed inflation running above the Fed's target and heading in the wrong direction, he added.

Markets are pricing an 80% probability of a rate hike before year-end, with June non-farm payrolls data due Thursday representing the next key test.

Warsh, Iran, and the week ahead

Fed Chair Kevin Warsh is due to speak at the European Central Bank forum on Wednesday, and markets will be parsing his remarks for clues on the policy path ahead of the next Fed meeting at month-end, QCP analysts said.

The firm flagged thinner liquidity conditions this week given U.S. markets close Friday, with the U.S.-Iran ceasefire situation remaining fluid after both sides traded accusations of violations over the weekend.

Oil has held largely stable in the low $70s, suggesting cautious optimism that tensions may ease, though QCP warned of significant upside risk to oil prices if supply recovery proves slower than expected.

The bull case

John D'Agostino, head of strategy at Coinbase Institutional, pushed back on the prevailing gloom in a note circulated Monday.

The pain in crypto right now is real, but the underlying infrastructure continues to build, D'Agostino wrote, pointing to growth in stablecoin usage, evolving global regulatory clarity, and expanding adoption of blockchain-based value transfer systems outside the U.S. as evidence that the current downturn is "merely a blip."

Grayscale laid out two scenarios for the path ahead. If the Clarity Act clears the Senate, Strategy likely strengthens its balance sheet, and the Fed holds rates.

In a downside scenario, the Clarity Act stalls, digital asset treasuries deleverage further, and persistent inflation forces the Fed to hike. Bitcoin could fall moderately further, according to Zach Pandl, Grayscale Head of Research. The Block reported last week that Bitcoin's floor was showing signs of fragility as Fed hawks circled and ETF investors continued to pull back.

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