The iShares Bitcoin ETF (IBIT) stock has plunged hard in the past few days as inflows into the fund continued retreating. IBIT and other popular Bitcoin ETFs by Fidelity, Invesco, and Ark Invest have all retreated. It moved to a low of $36 on Tuesday and is hovering its lowest point since March 5th.
Bitcoin halving ahead
There are signs that the iShares Bitcoin ETF’s inflows are slowing. Data by ETF shows that the fund added over $684 million last week. At its peak in March, the fund added over $2.7 billion as the price of Bitcoin surged.
The other Bitcoin ETFs have also seen weak inflows in the past few weeks amid weakness in the crypto market. This trend, however, is normal in the ETF industry.
The next important catalyst for the IBIT ETF will be this week’s Bitcoin halving event which will reduce the amount of rewards offered to miners. This halving, together with Bitcoin ETF inflows, partially explains why the price of BTC jumped sharply since 2022.
Halving is a good thing for BTC as it moderates supply in the market. For example, in most cases, the price of crude oil usually rises when the OPEC+ cartel votes to slash production.
Indeed, Bitcoin has always been sharply higher when halving happens. It was trading at $12 in the first halving in 2012 followed by $640 in 2016 and $8,605 in 2020.
Still, there are two main reasons why the IBIT ETF will likely retreat towards the halving event. First, it is happening at a time when investors are getting fearful about the Federal Reserve as inflation remains stubbornly high. Economists are now pricing in just one or two cuts this year. Others see no rate cut at all.
Second, there is a possibility that crypto investors will sell the halving news. For example, in 2023, Litecoin surged in the months leading to its halving and then nosedived when it happened. Most recently, Bitcoin Cash price rose above the halving event and then crashed by double-digits.
IBIT ETF technical analysis
The three-hour chart shows that the iShares Bitcoin ETF has formed a triple-top pattern around the $41 level. In most cases, this pattern is one of the most bearish sign. It is now nearing the crucial neckline at $35.43.
The IBIT fund has moved below the 23.6% Fibonacci Retracement level. Also, the fund has moved below the 50-period Exponential Moving Average (EMA) while the Relative Strength Index (RSI) has moved to the oversold level.
Therefore, the outlook for the fund is extremely bearish as sellers target the key support at $32, its 50% Fibonacci Retracement point. This price is about 10.7% from the current level.
Contributors
