Bitcoin Weekly Forecast: Has the BTC Selloff Ended?

• Bitcoin price is down more than 6% this week through Friday after rejecting a key resistance barrier.
• Rising tensions between Iran and Israel have weighed on risk assets, fueling BTC price declines.
• U.S. spot Bitcoin ETFs saw outflows of $288.4 million through Thursday, indicating a decline in institutional demand.

The price of Bitcoin (BTC) fell more than 6% this week through Friday, as the escalating conflict between Iran and Israel added fuel to this selloff. The drop was also supported by weaker institutional demand for ETFs, which saw more than $280 million in outflows this week. Some analysts suggest that the growing geopolitical conflicts could escalate further, pushing Bitcoin prices even lower, potentially to $55,000. However, from a technical point of view, the bulls seem to be holding strong at a critical support level.

Why Was Bitcoin Dumped This Week?

After ending the previous week on an upbeat note, Bitcoin faced pushback on Monday. BTC fell more than 3.5%, a move that could be linked to lower flows in US Bitcoin exchange-traded funds (ETFs).

On Tuesday, Bitcoin fell further by more than 4% as Iran fired missiles at Israel. This strike came in response to Israel’s series of attacks on Lebanon in recent weeks. Bitcoin’s price drop triggered a wave of liquidations in the crypto market, resulting in more than $500 million in total liquidations and more than $140 million in BTC specifically, according to data from CoinGlass.

A report from crypto asset trading firm QCP Capital predicts that Bitcoin prices could fall further, potentially to $55,000, if geopolitical conflicts in the area continue to escalate.

Also on Tuesday, the Bitcoin ETF saw an outflow of $240.60 million, the biggest one-day drop since Sept. 3, ending an eight-day streak of inflows.

Following the steep selloff, Bitcoin tried to recover but failed, leading to a slight decline on Wednesday. However, ETF data still showed an outflow of $52.90 million.

BlackRock’s historical data for Bitcoin during periods of geopolitical tension shows that BTC behaves like traditional short-term risk assets. Over the long term, however, BTC has shown more resilience than gold, the data shows.

The table below shows that through major geopolitical events, Bitcoin’s 10-day return and 60-day return have generally outperformed gold and the US S&P 500 stock index.

Chart of major assets during geopolitical events. Source: BlackRock

On Thursday, the sales steam cooled slightly. Bitcoin traded in a range with no signs of institutional demand as the ETF saw another $54.20 million outflow. On Friday, it tries to stabilize around $60,000.

Bitcoin Spot ETF net flow chart. Source: Coinglass

Bitcoin Technical Outlook

Bitcoin’s weekly chart shows that after three straight weeks of rallying in September, the largest crypto asset by market capitalization is facing resistance after testing the downtrend line, falling more than 6% through Friday.

This downtrend line (formed by connecting several weekly closes since late March) roughly coincides with the weekly resistance level around $65,800, making it a key resistance area. If BTC continues its decline, it could drop further to retest the next weekly support around $55,400, which roughly coincides with its 50-week exponential moving average of $55,336.

The Relative Strength Index (RSI) momentum indicator is hovering around its neutral level of 50, indicating trader indecision. The ongoing decline could continue if the RSI falls decisively below its neutral level.

BTC/USDT weekly chart

The daily chart, however, shows some signs of cooling due to the recent selloff. On Wednesday, BTC found support around the 200-day EMA at $59,904. As of Friday, over $61,500 is traded.

If this support holds, BTC could rise to retest its 61.8% Fibonacci retracement level around $62,000. A successful close above it could extend the rally to the $66,000 mark. Friday’s rally has put the RSI technical indicator slightly in recovery mode as it aims to close above 50. For BTC to recover, the RSI would need to trade above this neutral level.

BTC/USDT Daily Chart