Bitcoin Tests $70K Support as On-Chain Metrics Signal Bearish Shift; Fed Outlook Weighs

Hong Kong – Bitcoin struggled to maintain momentum above $75,000 in Asian trading on Wednesday, with a cluster of on-chain indicators pointing to a deterioration in market structure and waning investor participation. The pullback comes amid a broader recalibration of expectations for near-term Federal Reserve rate cuts, removing a potential tailwind for risk assets.

Analytics firm CryptoQuant’s latest weekly report struck a cautious tone, noting its proprietary "Bull Score Index" has fallen to zero. The report suggests the current weakness is structural, marked by a thinning buyer base and contracting liquidity, rather than a temporary correction within a bull cycle.

Data from Glassnode corroborates the view of a demand vacuum. Spot trading volumes remain weak, and selling pressure is not being met with sustained buying interest. "The issue isn't panic selling, but a lack of committed buyers," the report observed.

The shift is starkly visible in institutional flows. U.S. spot Bitcoin ETFs, which were consistent net buyers during the Q1 rally, have recently flipped to net sellers. This reversal has created a demand gap equivalent to tens of thousands of Bitcoin compared to the same period last year.

Further dampening sentiment, the "Coinbase Premium"—the price difference between Coinbase and other global exchanges, often seen as a proxy for U.S. institutional demand—has remained negative since October. Historically, strong U.S. spot buying has been a key engine for major Bitcoin bull runs.

Liquidity conditions are also tightening beneath the surface. The growth of the aggregate stablecoin market cap, a critical source of fuel for crypto trading, has stalled. Notably, the market capitalization of Tether (USDT) has recently seen negative growth for the first time since 2023.

Technically, Bitcoin is trading below its 365-day moving average, a long-term trend indicator. On-chain valuation models suggest major support now clusters between $70,000 and $60,000.

The macro backdrop adds another layer of complexity. Prediction markets now show a high probability of the Fed holding rates steady at its April meeting, with only modest odds priced in for a June cut. This limits hopes for imminent liquidity injections that have previously buoyed speculative assets.

Political developments have further clouded the policy outlook. Former President Donald Trump's recent comments, suggesting he would not have appointed a Fed chair inclined to raise rates, have stirred debate about central bank independence under a potential second Trump administration.

Market Snapshot:

• BTC: Trading in the mid-$70,000s after failing to hold above $77,000. Rebound attempts lack conviction amid thin spot demand.
• ETH: Hovering just above $2,000, struggling for direction as broader crypto sentiment softens.
• Gold: Found a bid near $5,000, benefiting from safe-haven flows amid geopolitical tensions and economic uncertainty.
• Nikkei 225: Slightly lower, tracking overnight weakness in U.S. tech shares, but showing relative resilience.

Trader Perspectives:

"The data is clear—this isn't a healthy consolidation. The ETF flows reversal and negative Coinbase premium tell us the big U.S. money is on the sidelines or selling. We're likely retesting $68K before any meaningful rally," said Marcus Chen, a Singapore-based portfolio manager at Apex Capital.

"Everyone's over-reading a short-term liquidity squeeze. The halving narrative is intact, and institutional adoption is a multi-year trend, not a quarterly flow chart. This is a buying opportunity before the next leg up," countered Riya Kapoor, an analyst at Digital Horizon Fund in Mumbai.

"It's pathetic. The so-called 'digital gold' can't hold gains and is now trading like a speculative tech stock. The ETFs were a trap for retail, allowing whales to distribute. The whole market is being propped up by hopium and memecoins," argued David Keller, an independent trader based in Sydney, in a sharply critical take.

"The correlation with macro factors is higher than ever. Until we get clarity on the Fed's path and the U.S. election, volatility will remain elevated. It's a trader's market, not an investor's," noted Dr. Alina Petrova, a financial economist at the University of Hong Kong.