Bitcoin Declines Below $110K Amid Bearish Market Sentiment and ETF Inflow Slowdown

Bitcoin's price fell below $110,000 amid weakened investor confidence and slower-than-expected ETF inflows, reflecting bearish momentum across the digital asset market. This decline was compounded by unexpectedly strong U.S. economic data, which dampened hopes for near-term Federal Reserve rate cuts. Cryptocurrencies faced broad-based losses alongside waning sentiment, exposing key vulnerabilities in the sector.

Bitcoin and Cryptocurrency Market Performance

On September 25, Bitcoin (BTC) experienced a sharp decline, trading at $109,288, down 3.76% compared to the previous day. Earlier in the session, BTC briefly reached $114,000 before retreating to a low of $108,000, signaling volatile market conditions. Ethereum (ETH) also suffered significant losses, dropping 6.41% to $3,895.

The downturn wasn’t limited to Bitcoin and Ethereum. Other prominent cryptocurrencies saw steep declines:

• XRP: Down 6.96%
• Solana (SOL): Fell 6.94%
• Dogecoin (DOGE): Slipped 7.24%
• Cardano (ADA): Dropped 6.20%
• HyperLiquid (HYPE): Pulled back 8.56% despite recent surges

The overall cryptocurrency market capitalization shed approximately $60 billion in a single day, contracting by 1.26% to $3.91 trillion. Bitcoin maintained a commanding market dominance of 57.83%, while Ethereum accounted for 12.83%, highlighting their relative strength while broader conditions weakened.

ETF Inflows Decline Amid Strong U.S. Economic Data

Investor activity in Bitcoin spot exchange-traded funds (ETFs) experienced an alarming slump, with weekly net inflows plummeting 54%—falling from $2.03 billion last week to $931.4 million this week. Similarly, Ethereum ETF inflows shifted to net outflows, underscoring deteriorating demand for cryptocurrency ETFs.

This slowing activity coincided with robust macroeconomic indicators from the United States. The U.S. Department of Commerce revised second-quarter GDP growth upward to an annualized rate of 3.8%, exceeding initial estimates of 3.3%. This unexpected growth tempered expectations for Federal Reserve rate cuts, keeping borrowing costs elevated—an unfavorable development for risk-sensitive assets like cryptocurrencies.

The U.S. Dollar Index (DXY) climbed to a two-week high of 98.50 (+0.68%), while the yield on the 10-year U.S. Treasury rose to 4.172%. Dollar strength and higher bond yields often correlate with increased risk aversion, contributing to the crypto market's struggles.

Bitcoin futures traded on the CME reflected these bearish dynamics:

• September contracts: Down 3.44% to $109,580
• October contracts: Fell 3.48% to $110,300
• November contracts: Declined 3.48% to $110,095

Ethereum futures fared worse, posting declines of over 5%, further showcasing the severity of the market's slide.

Long-Term Optimism Rooted in Technical Analysis

Despite short-term pessimism, analysts point to positive long-term technical patterns emerging for Bitcoin. Merlijn The Trader identified a "Cup and Handle" pattern developing, historically associated with bullish price movements. He emphasized that Bitcoin generally enters stronger rallies when its Relative Strength Index (RSI) exceeds 70, suggesting renewed momentum could be possible.

Michaël van de Poppe observed Bitcoin testing support levels in the $111,500–$112,000 range, while significant resistance appears concentrated around $114,755 and $116,813. He also noted a substantial supply zone between $118,000–$119,500, which could provide hurdles for upward moves.

Ted Pillows highlighted a rising trendline dating back to 2023 that aligns with CME gap intervals near the $90,000–$92,000 range. This level could serve as critical support if Bitcoin’s price continues to slide further. Pillows also pointed to the increasing short-position interest on Binance Futures, which recently hit a three-month high—a factor that might spark a short squeeze and initiate a short-term price rebound.

Market Sentiment and Near-Term Outlook

Bitcoin’s ability to hold the psychological $110,000 support level will be vital in the immediate term. A further drop to test lower levels around $100,000 could invoke the $90,000–$92,000 zone as the last technical defense. Over the longer time horizon, recurring cyclical patterns, institutional demand recovery, and reinvigorated ETF inflows are expected to play crucial roles in shaping Bitcoin’s trajectory.

Investor sentiment has notably weakened. The Alternative Fear & Greed Index—a widely monitored measure of crypto market sentiment—fell to 39, indicating "fear" and marking a shift from the prior "neutral" sentiment zone observed in recent weeks. This downturn underscores growing risk aversion among market participants.

Conclusion

Bitcoin and the broader cryptocurrency market find themselves at a crossroads, grappling with macroeconomic headwinds and weakening investor demand. While short-term struggles persist, technical patterns and cyclical indicators suggest the potential for long-term recovery. For now, maintaining key support levels and monitoring sentiment indicators will be pivotal in navigating this challenging period within the digital asset space.