Can Bitcoin recover without institutional demand?

Bitcoin is edging higher on Monday after a quiet weekend and continues to trade in a narrow range as investors digest developments in US-Iran negotiations and assess the outlook for US monetary policy following the Fed's hawkish shift last week. Meanwhile institutional BTC demand remains elusive. 

The latest reports suggest progress between the US and Iran following an initial round of talks on Sunday. Qatar and Pakistan, which are mediating discussions, struck an optimistic tone, saying both sides had committed to holding technical talks this week on a proposed 14-point framework agreement. 

Meanwhile, vessels are continuing to transit the Strait of Hormuz, albeit at a reduced pace compared with pre-conflict levels. Even so, this is helping to ease oil supply concerns, with Brent holding below $80 a barrel. As a result, inflation worries are easing, which is supportive of risk assets. 

Hawkish Fed expectations limit upside 

However, gains in Bitcoin and other risk assets could remain limited following last week's hawkish Federal Reserve meeting. While the Fed left interest rates unchanged, nine of 18 policymakers now expect a rate hike this year, and new Fed Chair Kevin Walsh doubled down on the central bank's commitment to its 2% inflation target, reinforcing the higher-for-longer narrative. 

Attention this week turns to Core PCE, the Federal Reserve's preferred inflation gauge, which could provide further clues over the path for interest rates. 

ETFs outflows each a record high 

Institutional demand remains weak after Bitcoin ETFs recorded a sixth straight week of net outflows. However, the pace of outflows has slowed sharply in recent weeks, hinting that the most intense phase of institutional selling may be passing. 

BTC ETF outflows totalled $6.35 billion over the past 30 days, the largest 30-day drawdown on record, as institutional investors cut exposure. This has coincided with Bitcoin's sharp correction of 17% over the same period. 

Several factors have been driving the ETF sell-off, including: 

• Higher Treasury yields. 
• Fading hopes for rate cuts. 
• Capital rotation into AI-related assets. 

However, selling pressure has eased considerably in recent sessions. Weekly outflows have fallen 87% from the early June peak, dropping from $1.72 billion in the week ending June 5 to $226 million last week. 

At the same time, Bitcoin has continued to hold above the key $60,000 support level, pointing to resilience in the face of persistent outflows. This suggests longer-term holders may be absorbing much of the supply being released by ETF investors. 

The sharp slowdown in redemptions also raises the possibility that peak selling pressure has passed. However, ETF flows remain negative, and a return to sustained inflows would likely be needed to confirm a more durable bottom in Bitcoin. 

For now, Bitcoin appears caught between improving macro conditions and still-weak institutional demand, leaving the cryptocurrency rangebound ahead of key US inflation data. 

BTC technical analysis 

BTC has recovered from the 59K 2026 low. However, the longer-term bearish bias remains as the price trades well below the 50-day and 200-day SMAs. The RSI has recovered from oversold territory and is pointing higher in the low 40s, hinting at easing downside pressure. 

Buyers have pushed above the 20 SMA in an encouraging near-term move, but the price needs to rise above 67.3K, the June 15 high, to create a higher high and expose the 50 SMA at 72K. Above here, the lower band of the rising channel comes into play at 75K, ahead of the 200 SMA at 76K. 

Given the longer-term bias remains bearish, sellers remain in control and will look to break below 60K to create a lower low and open the door to 53K, the September 2024 low.