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Expert Analysis: How will the SEC’s next move shape XRP’s future? Read more here.
Bitcoin Under Pressure on Demand Outlook Concerns
While investors speculate about the SEC withdrawing its appeal, bitcoin (BTC) continued to trend lower. Optimism about a demand boost waned as investors considered US crypto Czar David Sacks’ recent press conference.
In his first press conference since being appointed the AI and Crypto Czar, Sacks said that the Presidential Working Group on Digital Assets will explore the possibility of a Bitcoin reserve. However, he downplayed expectations of a swift move to make BTC a strategic reserve asset.
Speculation that BTC could become a US Strategic Bitcoin Reserve (SBR) drove prices to a record high of $109,312 on January 20. In January, Anthony Scaramucci suggested that the US government could make a substantial BTC acquisition, stating:
“They’ll probably buy another four or five hundred thousand BTC. Let me tell you why I think it will happen ok. Trump wants it to happen and he’s got the Senate Banking Committee. Tim Scott wants it to happen. He’s going to be the Chair of the Senate Banking Committee. Bessent wants it to happen.”
However, Congress, the Federal Reserve, the Treasury Department, and the President must approve BTC as a strategic reserve asset. In late 2024, Senator Cynthia Lummis set the wheels in motion, introducing the Bitcoin Act. The bill proposes that the US government buy one million BTC over five years with a 20-year mandatory holding period.
US BTC-spot ETF Market Sees Inflows Slow on SBR Silence
As BTC trended lower, inflows into US BTC-spot ETFs also slowed, reflecting market caution. According to Farside Investors, February 5 ETF inflows included:
- Fidelity Wise Origin Bitcoin Fund (FBTC) had net inflows of $10.6 million.
- WisdomTree Bitcoin Fund (BTCW) reported net inflows of $11.4 million.
Excluding BlackRock’s (BLK) iShares Bitcoin Trust (IBIT), the US BTC-spot ETF market saw total net inflows of $22.0 million. While modest inflows could cushion any early downside on February 6, Wednesday’s subdued numbers may also keep BTC below the $100k level.
Bitcoin Price Outlook
On Wednesday, February 5, BTC declined by 1.34% after Tuesday’s 3.54% loss, closing at $96,668. Significantly, BTC fell short of the $100K level for the first time since January 17.
BTC’s near-term price trend hinges on several factors, including US-China tensions, SBR-related news, the Fed rate path, and US BTC-spot ETF flows.
Possible Scenarios:
- Bearish case: Rising trade tensions, a hawkish Fed, and stalled SBR discussions could pull BTC below $90,000.
- Bullish case: De-escalating trade risks, a more dovish Fed, and increasing political support for an SBR could push BTC toward its all-time high of $109,312.
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