Bitcoin (BTC) experienced a significant recovery after testing $60,000 in February. At this point, BTC rose above $82,000 in recent weeks, continuing the upward trend that began in February. However, it couldn’t maintain this level and retreated back to the critical support level of $77,000.
While Bitcoin has been moving sideways in recent days, one analyst believes that the direction of BTC depends on the Fed’s approach and the Coinbase Premium index.
XWIN Research Japan, a CryptoQuant analyst, stated that the Fed has entered a new era with its new chairman, Kevin Warsh, and that this could be crucial for Bitcoin.
According to the analyst, markets are more focused on whether the Fed’s philosophy has changed since Warsh became chairman, rather than on interest rate cuts.
“…Markets increasingly view the new Fed regime as a shift from a market-saving Fed to a discipline-focused Fed. This is of great importance for Bitcoin.”
In this context, the analyst stated that the new Fed under Kevin Warsh is likely to prioritize monetary tightening, making metrics like Coinbase Premium and exchange net flows important indicators for the direction of BTC.
Accordingly, the analyst argues that prolonged tightening concerns stemming from the Fed could weaken BTC demand, potentially lowering Coinbase’s premium and increasing exchange inflows, thus creating downward pressure on the BTC price.
“…The first on-chain signal likely to react will be Coinbase Premium, a key indicator of US institutional spot demand. If concerns about prolonged high interest rates or ongoing monetary tightening increase, institutional buying appetite may weaken first, pushing Coinbase Premium into negative territory.”
Another indicator is Bitcoin Exchange Net Flow. According to the analyst, the risk-aversion environment that may arise after the new FED regime could trigger higher exchange inflows and short-term investor selling. This could increase pressure on the price.
However, the analyst noted that a rebound in spot Bitcoin ETF inflows could increase new capital flows and potentially offset these effects, keeping the price within a certain range.
“…If ETF inflows rebound, exchange reserves continue to fall, and Coinbase Premium becomes positive again, markets may begin to price in a new reality: Bitcoin can structurally attract capital even under higher interest rates.”
The balance between institutional investor demand for ETFs and potential on-chain selling pressure appears to be determining whether Bitcoin can hold onto its key support levels or retreat.
*This is not investment advice.
