Bitcoin price: bull trap likely as Fear and Greed Index falls,ETF outflows rise

Bitcoin price was largely unchanged on Wednesday morning as exchange-traded funds (ETFs) demand waned and the Crypto Fear and Greed Index dropped.

BTC was trading at $77,173, a few points below this month’s high of $79,000.

Bitcoin price at risk as ETF inflows ease

BTC price remained on edge on Wednesday as investors embraced a risk-off sentiment in the market.

This was evident in the performance of the US stock market, with the Dow Jones and S&P 500 indices falling by over 0.50%. Asian indices like the Hang Seng and the Nikkei 225 also dropped.

A major source of risk is the soaring crude oil prices, which have remained at an elevated level this week.

The prices may continue rising this month now that President Donald Trump is considering a prolonged blockade in a bid to put more pressure on the Iranians.

Soaring crude oil prices mean that inflation will remain high in the coming months, making it difficult for the Federal Reserve and other central banks to cut interest rates in the near term.

In addition to oil, other products are seeing a surge in prices. For example, fertilizer prices have soared, leading to higher agricultural prices, with wheat prices rising to the highest level in years.

Bitcoin price has also stalled because of the ongoing performance in the ETF market where the momentum has stalled.

Data shows that these funds shed over $89 million in assets on Tuesday after losing $263 million in the previous day.

Their outflows have risen to $352 million, a big improvement after they added $823 million last week.

There are signs that investors are being fearful, with the Crypto Fear and Greed Index falling from the greed zone of 62 to the current 31. If this trend continues, there is a risk that the index will drop to the fear zone, which may lead to a steep sell-off.

Meanwhile, Bitcoin’s demand has started to slow in the futures market, where the open interest has dropped to $55 billion from this month's high of $56 billion.

Most notably, demand from American investors has fallen substantially in the past few weeks, as evidenced by the falling Coinbase Premium Index, which has remained in the red since April 28.

This is an important index that compares Bitcoin’s price on Coinbase and other exchanges.

Bitcoin normally trades at a premium in the US when demand is rising.

Bitcoin price technical analysis as bull trap fears remain

BTC price chart | Source: TradingView

The daily timeframe chart shows that the Bitcoin price has been in an uptrend in the past few months.

On the positive side, the coin has moved above the Supertrend indicator and the 50-day Exponential Moving Average (EMA).

However, there are signs that the upward momentum is fading. The Average Directional Index (ADX) has stalled at 25. 

Also, it has formed an ascending channel and is now hovering near its upper side. That is a sign that bulls are afraid of opening bids above this channel.

Therefore, there is a risk that the price will drop as bears target the lower side of this channel at $70,000.

On the other hand, a move above the upper side of the channel will point to more gains, potentially to the 38.2% Fibonacci retracement level at $85,000.