Quick Take
Bitcoin slipped below $64,000 as investors reacted to a hawkish Federal Reserve decision under new Chair Kevin Warsh.
Spot Bitcoin ETFs saw $82.2 million in net outflows, while spot Ethereum ETFs also recorded withdrawals, signaling weaker institutional demand.
Onchain data shows Bitcoin may be entering a recovery phase, but analysts remain divided. Glassnode says BTC is still trading below key valuation levels, while Kraken’s chief economist argues that historical data favors long-term buyers near current prices.
Bitcoin Drops as Fed Turns More Hawkish
Bitcoin traded below $64,000 on Thursday, extending pressure across the crypto market after the Federal Reserve delivered a hawkish policy message.
The move came after Fed Chair Kevin Warsh made his first policy appearance at the helm. His tone unsettled risk assets, with traders now pricing in higher odds of a possible interest rate hike before the end of the year.
The pressure also hit crypto investment products. According to SoSoValue, spot Bitcoin exchange-traded funds recorded $82.2 million in net outflows on Wednesday. Fidelity’s FBTC was the only major fund to post a meaningful inflow, bringing in around $14 million.
Spot Ethereum ETFs also saw weaker demand, with $29.4 million in net outflows. Grayscale’s Ethereum Mini Trust led the withdrawals with around $9.9 million leaving the fund.
Bitcoin Onchain Data Shows Signs of Repair
Despite the short-term weakness, Bitcoin’s onchain indicators suggest the market may be slowly stabilizing.
Glassnode said Bitcoin is still trading around 15% below its onchain “True Market Mean” of $77,200. This keeps the broader market structure in bear-market territory, even after BTC bounced from recent lows.
Another important metric, short-term holder MVRV, has improved from 0.81 to 0.90. This metric tracks the unrealized profit or loss of coins moved in the last 155 days.
However, it remains below the 1.0 breakeven level, meaning many recent Bitcoin buyers are still holding losses. The implied cost basis for this group is around $72,600, leaving short-term holders roughly 10% underwater on average.
Capital Outflows May Be Slowing
Bitcoin’s realized cap, which reflects the aggregate cost basis of all coins in circulation, has fallen 1.45% over the last 90 days to about $1.07 trillion.
Still, the seven-day change has nearly stalled at -0.18%, which may signal that capital outflows from the Bitcoin network are beginning to slow.
Liquidity has also improved since Bitcoin’s recent slide toward $60,000. Glassnode noted that Binance’s order book has shifted more toward buyers, with bid-side liquidity now outweighing sell orders by the widest margin in months.
This suggests that some traders may be stepping back into the market at lower price levels.
Hawkish Fed Clouds Bitcoin Recovery
Bitcoin’s weakness in May and June also followed broader geopolitical uncertainty linked to the U.S.-Iran war.
According to Glassnode, BTC fell about 22%, dropping from $77,486 to $60,861, as oil and gold attracted safe-haven demand.
This week’s ceasefire memorandum between Washington and Tehran helped ease some of that pressure. Crude oil fell from $86 to $76, while Bitcoin stabilized in the mid-$60,000 range.
However, the Federal Reserve’s hawkish shift made the market outlook more complicated.
Capital.com Senior Financial Market Analyst Kyle Rodda noted that Warsh’s first Fed meeting removed forward guidance, shortened the post-meeting statement, and withheld his own dot from the central bank’s closely watched rate projections.
Half of the Federal Open Market Committee now expects a rate hike before year-end. That pushed the market-implied probability of a hike to about 90%, sending stocks and gold lower while lifting the U.S. dollar.
Analysts Warn of More Crypto Volatility
Bitget Wallet Research Analyst Lacie Zhang said the Bitcoin and gold selloff was driven more by the Fed’s tone than by the rate decision itself.
The rate hold had already been priced in. The bigger issue, she said, is that a less communicative Federal Reserve is harder for markets to hedge.
Zhang also expects volatility to spread beyond FOMC meetings. Markets may now react more sharply to every major economic report, including CPI inflation data, PPI, PCE, and jobs reports through the end of the year.
That means Bitcoin traders could face more frequent volatility as each data release becomes a potential signal for future Fed policy.
Geopolitics May Not Be the Main Driver
Not all analysts believe the ceasefire is the biggest factor behind Bitcoin’s latest price action.
Mike McCluskey, co-founder and CEO of tokenization platform tx and a former Fidelity Investments account executive, argued that BTC is not trading purely on geopolitical headlines.
In his view, the key question is whether lower oil prices can reduce inflation pressure enough to influence Federal Reserve policy. That process may take longer than the market’s immediate reaction to ceasefire news suggests.
McCluskey also said the scheduled signing in Switzerland remains an important test. The agreement is still interim, sanctions remain in place, and renewed military action could return if nuclear talks break down.
For institutional demand to look convincing, he said spot Bitcoin ETFs would need to show consistent inflows through the end of the week. Tuesday’s small $10.1 million net inflow briefly broke the outflow streak, but Wednesday’s $82.2 million outflow quickly reversed that improvement.
Bitcoin Near 200-Week Moving Average
Kraken Chief Economist Thomas Perfumo offered a more optimistic historical view.
He said Bitcoin’s dips below its 200-week moving average, currently near $62,358, have historically marked some of the market’s best entry points.
Since mid-2017, Bitcoin has closed below this level on only about 10% of trading days. Buyers at those levels have historically seen median returns above 100% within one year and more than 300% within two years.
Perfumo added that the median time for these buyers to break even has been just two days, while the median drawdown over the following year has been about 9%.
Fund Managers Still Expect More Downside
Despite those historical signals, many crypto fund managers remain cautious.
A survey conducted for The Block’s Funding newsletter found that most expect Bitcoin to move lower before a stronger recovery begins. Their concerns include macro uncertainty, weaker liquidity, and capital rotating into artificial intelligence-related trades.
However, Bitwise Chief Investment Officer Matt Hougan argued that long-term investors may be asking the wrong question when trying to identify the exact Bitcoin bottom.
According to Hougan, the more important issue is whether the next major cycle top is still ahead.
Bitcoin Price Outlook
Bitcoin was last trading around $63,900, while Ethereum traded below $1,750, according to The Block’s price page.
For now, Bitcoin remains caught between improving onchain signals and a difficult macro environment. ETF outflows, hawkish Fed policy, and inflation uncertainty continue to weigh on sentiment.
Still, stronger bid-side liquidity, slowing realized cap declines, and historical support near the 200-week moving average suggest that long-term investors are watching current levels closely.
If Bitcoin ETF inflows return and macro pressure eases, BTC could attempt to rebuild momentum. Until then, the market may remain volatile as traders react to every new inflation report, jobs data release, and Federal Reserve signal.
