Bitcoin price ended February in the red, continuing a downward trend that started in October last year. It has now dropped in the last five consecutive months, a move that has erased billions of dollars in value. Still, there are a few reasons why the BTC price may bounce back in March.
Bitcoin ETF Outflows are Slowing
The ongoing Bitcoin price crash has coincided with the ongoing spot ETF outflows. Data compiled by SoSoValue shows that these funds have had over $6 billion in outflows in the last four months.
There are now signs that the outflows are slowing. Data compiled by SoSoValue shows that spot BTC ETF outflows slowed to just $206 million in February, much lower than the previous month’s $1.6 billion.
The data also shows that spot Bitcoin ETFs added over $787 million last week as the coin remained in a consolidation phase. Therefore, there is a likelihood that Bitcoin ETF inflows will resume this month, a move that may boost its price.
War in the Middle East to End
One reason why the Bitcoin price has been under pressure in the past few months is that investors were anticipating the US and Israel to launch an attack on Iran. This attack happened on Saturday, with the two countries killing Ayatollah Ali Khamenei.
The attack has sent shockwaves in the Middle East, a move that may lead to higher crude oil prices when the market opens on Monday. Indeed, Hyperliquid data shows that the WTI crude oil was trading at $88 on Sunday.
On the positive side, as we wrote before, the crisis in the region will likely start to de-escalate in the coming days or weeks, which will lead to a rebound in most assets like Bitcoin. If this happens, the biggest market risk this year will be eliminated.
READ MORE: Could a Trump Strike on Iran Trigger a Crypto Market Rally and Recovery?
Fear and Greed Index in the Extreme Fear Zone
Meanwhile, the Crypto Fear and Greed Index remains in the extreme fear zone, which is a highly bullish sign in the crypto industry.
The index measures sentiment in the crypto industry by looking at key factors like Bitcoin price action, market volatility, Bitcoin dominance, and activity in the futures market.
Bitcoin price rallies often start when the index is in the extreme fear zone zone. This is based on Warren Buffett’s recommendation that investors should buy assets when others are fearful.
A good example of this is what happened earlier this year when the Bitcoin price soared after the index moved to the extreme fear zone.
Still, for a Bitcoin recovery to happen, it will need to overcome key technicals, including moving above the moving averages and the Supertrend indicator.
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