Bitcoin steadies below 77k with geopolitics and weak institutional demand in focus

Bitcoin has stabilised around 77k after two weeks of correction, which saw the largest cryptocurrency fall by more than 6%. 

BTC fell from a peak of 83k in early May to 74k on Saturday, then recovered to around 77k at the time of writing. The recovery was aided by optimism over a possible U.S.-Iran peace deal and signs of growing institutional adoption of cryptocurrency derivatives. However, renewed geopolitical uncertainty, Treasury repositioning, and ETF outflows are limiting the upside. 

Deal or no deal? 

Market sentiment improved on Monday on hopes that talks aimed at ending the nearly three-month Middle East conflict were making progress, easing concerns over ongoing disruption to oil shipments through the Strait of Hormuz. However, the US military then conducted fresh attacks against Iran, raising some questions over whether a deal is plausible. 

Oil prices were down 5% at the start of the week, and have risen 2% today but remain below the key $100 per barrel level. US futures are modestly lower after being closed on Monday for a public holiday. 

Oil below $100 is helping to ease inflation fears, which had sent global bond yields sharply higher in recent weeks, tightening financial conditions and drawing liquidity away from risk assets such as Bitcoin. 

Nasdaq crypto options plan & BTC ETF outflows 

Crypto markets have also drawn support from news that Nasdaq PHLX received conditional approval from the Securities and Exchange Commission to list cash-settled Bitcoin index options under the ticker QBTC. The proposal is still pending approval from the Commodity Futures Trading Commission. 

The proposed contract will settle in U.S. dollars rather than physical Bitcoin, allowing investors to trade through a traditional brokerage account instead of opening a separate crypto derivatives account. The move marks another step towards mainstream adoption of digital assets by traditional financial institutions. 

However, this latest development also comes at a time when institutional demand is deteriorating. Spot Bitcoin ETFs recorded $1.26 billion in net outflows last week, marking the heaviest weekly drain since late January. Persistent net outflows could pressure Bitcoin prices lower. 

Bitcoin technical analysis 

BTC/USD continues to trade within an ascending channel dating back to the beginning of February. The price recently ran into resistance at 82.8k, the 200 SMA, before rebounding lower and briefly breaking below the 50 SMA, falling to a low of 74.2k before recovering to retest the 50 SMA resistance around 77k. 

Buyers need to hold above the 50 SMA to extend the recovery towards 80k and then 82.5k, the May high. A move above here would create a higher high and bring 85k into focus, the 38.2% Fibonacci retracement of the 126k high and 60k low. 

Failure to hold above the 50 SMA could see the price fall back towards 74k. A break below here would create a lower low, bringing the lower band of the rising channel into focus at 72.2k. Below there, attention turns to 70k, the psychological level, and 65k, the April low.