After struggling at the end of the year with numerous consecutive days of net outflows, the spot Bitcoin ETFs in the States finally registered some notable inflows on Friday.

The Ethereum counterparts sit in the opposite corner, as they have been mostly in the green since mid-December despite the FOMC aftermath on the entire market.

BTC ETFs Are Back

The latest FOMC meeting that took place in mid-December had a dramatic and immediate effect on US-based investors in terms of their Bitcoin-related activities. Following a superb streak after the presidential elections in which they poured billions of dollars within weeks into the regulated BTC financial vehicles, they did a 180-turn and started taking funds out.

December 19 was the worst day in terms of daily net outflows, with $671.9 million taken out. By January 2, seven out of the nine trading days were in the red, with a total withdrawn amount of roughly $2 billion.

This negative streak was finally broken on Friday as the spot Bitcoin ETFs saw $908.1 million in net inflows. Fidelity’s FBTC led the pack with $357 million, followed by BlackRock’s IBIT at $253.1 million and Ark Invest’s ARKB at $222.6 million. No fund recorded any outflows.

Friday’s numbers were so impressive that they managed to turn the whole week around. After the $415.1 million withdrawn on Monday and $242.3 million on Thursday, the week ended in the green with $256 million in net inflows, given the minor $5.3 million on Tuesday.

BTC’s price actions within the same week were quite volatile as the asset slumped hard on Monday amid the massive outflows to $91,300. However, it pumped to almost $99,000 later during the week as the inflows returned.

Ethereum ETFs’ Landscape

Unlike the BTC ETFs, the funds tracking Ethereum saw fewer days in the red after the aforementioned Fed meeting. Withdrawals were observed on December 19 and 20, but investors started to pour funds into them in the following days.

The past week was less positive, though, as net outflows dominated. $55.5 million was withdrawn on Monday and $77.5 million on Thursday. The $36 million in net inflows on Tuesday and $58.9 million on Friday couldn’t make up the difference, and the week ended with $36.1 million in the red.

ETH’s price tumbled hard on Monday as well but is 6.5% up on a weekly scale, which is more than double the increase for BTC. As of press time, Ethereum’s native token stands above $3,600.

At its fourth quarter meeting on Dec. 27, the People’s Bank of China committee (POBC) proposed a more dovish (low interest rate) policy going forward.

At the same time, the US Fed has different plans.

China Announces Interest Rate Cut

Financial analysts expect the bank to make adjustments to the target funds rate so that credit demand aligns better with monetary policy, according to Reuters. As a result, crypto analysts expect a big wave of monetary support for Bitcoin prices in the Middle Kingdom’s yuan printing press.

China’s central bank issued a statement on Friday announcing a cut to the banks’ reserve requirement ratio and interest rates at “a proper time.” The central bank says the PBOC is likely to further slash China’s interest rates from the current target of 1.5% sometime soon in 2025.

The PBOC last cut rates to 1.5% from 1.7% in September, the same month as the Federal Reserve pivoted to a rate-cutting regime. Moreover, China’s 10-year and 30-year treasury yields both hit record lows on Friday over expectations of fresh monetary easing.

Arthur Hayes Predicts ‘Glorious’ Bitcoin Rally

The interest rate cut at China’s central bank will help to counter a deflationary yuan that threatens to spiral into debt-crippling loan revaluation. But, it will also push up the prices of the basket of financial goods, especially stocks and cryptocurrencies.

South Africa cut its main overnight money market rate by 0.25% to 7.75% in November.

BitMEX co-founder Arthur Hayes predicted the next rate cut in Beijing will combine with the Fed’s low rate regime and cause a “glorious” rally for Bitcoin and other crypto assets in 2025.

Hayes is an influential macro strategic analyst for the price levels of major cryptocurrencies such as Bitcoin and Ethereum.

Immediately after the US Federal Open Market Committee (FOMC) announced a rate cut in September, Bitcoin’s price rocketed above the $60,000 level. Since then, the little orange coin has reached record high levels of $100,000.

Seven months ago in May, Hayes wrote on his Medium blog that when China brings out the monetary “bazooka,” buying a Wall Street Bitcoin ETF will be a no-brainer for regulated investors in the US.

“If my theory becomes reality, it is trivial for any institutional investor to buy one of the US-listed Bitcoin ETFs,” Hayes wrote. “Bitcoin is the best-performing asset in the face of global fiat debasement, and they know it.”

In addition to a rising Coinbase premium index, ETF flows for Bitcoin are two strong indicators that mainstream investors are flocking back to Bitcoin in January.

Bitcoin has continued to receive substantial support around the $90K level, sparking a slight recovery.

However, the prevailing bullish momentum appears insufficient to trigger a fresh rally toward a new all-time high, suggesting the likelihood of consolidation within this area in the short term.

Technical Analysis

By Shayan

The Daily Chart

After a period of decline, Bitcoin has found strong support at the critical $90K region, highlighting the presence of buyers at this level. This support aligns with the middle threshold of its multi-year ascending channel, reinforcing its significance.

Despite a slight increase in buying pressure resulting in a minor bullish rebound, the current momentum remains subdued, suggesting a continuation of the consolidation near this support zone.

For Bitcoin to initiate a new rally and aim for a new all-time high, the market must witness heightened demand and stronger bullish momentum.

The 4-Hour Chart

On the 4-hour chart, the $90K support level emerges as a pivotal defence zone, as evidenced by its role in halting the downward pressure over recent months.

The price action has recently formed an inverted head and shoulders pattern near this level, accompanied by an accumulation phase, signalling a potential bullish resurgence.

However, increased market demand and buying activity are necessary for BTC to break out and target the significant $108K resistance. Until then, the cryptocurrency will likely consolidate within the $90K region, awaiting a more evident directional move.

On-chain Analysis

By Shayan

American investors, particularly U.S. institutions, play a significant role in driving market movements. Consequently, analyzing their behaviour can provide valuable insights for predicting short-term market trends.

The Bitcoin Coinbase Premium Index is a critical metric that compares buying and selling pressure on Coinbase, a U.S.-centric exchange, against Binance.

The chart reveals that the Coinbase Premium Index has recently seen a notable increase, breaking above its 14-day Simple Moving Average for the first time in recent months. The index has approached values of zero, which indicates a shift in market dynamics, with U.S.-based buyers showing renewed interest and exerting buying pressure.

If the Coinbase Premium Index sustains levels above its SMA14 and moves into positive territory, it would signal that U.S.-based investors are becoming dominant in Bitcoin’s market activity. This scenario could lead to a bullish rally driven by heightened demand from these key market participants.