Bitcoin rose above $100,000 after a sharp sell-off that began over the weekend, with bitcoin falling to $91,229 by Monday morning. This recovery came after several strategic moves by President Donald Trump over the past twenty-four hours.
Among them is his decision to halt tariffs on Mexico and Canada, a move that has calmed investors and helped stabilize risky assets. The tariffs, originally announced on Saturday, were due to take effect on Monday night.
The announcement initially strengthened the US dollar (DXY) while sending cryptocurrencies and global equities lower. Ethereum (ETH) also fell, falling to $2,100, its lowest level since August, but has since risen above $2,800.
Cryptocurrencies often react sharply to macroeconomic uncertainty, especially on weekends when traditional markets are closed. According to Matt Mina, strategist at 21Shares, Bitcoin acts as an instant source of liquidity during unforeseen economic events.
Stock Markets Follow in BTC
Despite expectations that Bitcoin will act as a store of value, it has moved along with risky assets such as stocks. On Monday, major U.S. stock indexes also fell.
The Dow Jones Industrial Average (DJIA) fell 0.3%, the S&P 500 (SPX) fell 0.8%, and the NASDAQ Composite (COMP) ended the day down 1.2%.
Trump’s sovereign wealth fund ignites further crypto recovery
Meanwhile, Bitcoin’s recovery accelerated after Trump signed an executive order directing the creation of a US sovereign wealth fund. The Treasury and Commerce departments will work to develop the initiative. It aims to enhance U.S. economic competitiveness, reduce tax burdens on residents, and enhance fiscal sustainability.
Outflows from Bitcoin Funds: Causes and Analysis
The U.S. Bitcoin ETF market saw net outflows of $234.54 million on Feb. 3, marking a turnaround after five consecutive days of inflows, according to Trader Ton X.
Why have bitcoin ETFs seen outflows?
Several factors contributed to this sudden shift in Bitcoin ETF flows:
1. Take profit after recent price gains
· It is likely that investors have reaped profits after the strong performance of Bitcoin in recent weeks.
· Short-term traders may have exited their positions amid market volatility.
2. Market uncertainty and economic factors
· Macroeconomic concerns (such as Trump’s tariff policies) may have led to feelings of risk aversion.
· Traditional markets also saw corrections, impacting the movements of bitcoin ETFs.
3. Institutional rebalancing
· Fund managers often rebalance their portfolios at the beginning of a new month.
· Bitcoin ETF allocations may have shifted towards other assets or cash reserves.
The Bitcoin ETF inflows, which stood at $234.54 million on February 3, mark a turnaround after five days of continuous inflows. While profit-taking and macroeconomic concerns may have affected withdrawals, long-term institutional interest in bitcoin ETFs remains strong.
If demand for bitcoin ETFs picks up, we could see renewed inflows in the coming weeks, reinforcing Bitcoin’s position as a major institutional asset.
Although bitcoin is not specifically mentioned, many cryptocurrency analysts speculate that the fund may include digital assets. The White House statement acknowledged that 23 U.S. states already manage $332 billion in sovereign wealth funds, and that similar initiatives exist in other countries, such as the United Kingdom. Bitcoin traders are still attacking long positions in a lower range before liquidating all liquidity for a new high.
Increasing Bitcoin holdings among large entities
Holding and controlling Bitcoin (BTC) in a self-holding wallet remains valuable, and large-sized entities still hold ever-increasing Treasuries. In the past 30 days, the supply of bitcoin held in corporate and government treasury bonds, funds, and others has expanded to 3.03 million bitcoins, about 14% of the token supply.
Micro Strategy led the institutional holdings movement and replaced the dominance of retail holders. Demand from corporate and government-controlled portfolios is ultimately seen as bullish for bitcoin in the short term, while critics often raise concerns about too much centralization and control over assets.
Corporate Treasuries are still closely monitored for demand that may compensate for the cessation of Micro Strategy’s purchase. The fund, which used convertible bonds to buy bitcoin, stopped buying during occasional weekly periods. It is noteworthy that Bitcoin stopped buying at a time when the price of Bitcoin fell to $91,000.
Spot flows to buy whales after market declines also maintained overall market sentiment. On February 3, the biggest panic in the market pushed the fear and greed index down to 44 points. Just a day later, traders’ behavior again signaled “greed,” pushing the index back to its usual range around 72 points.
Bitcoin is still seen as a preferred offering over Ethereum (ETH) and other altcoins. A rapid recovery of the market could lead to several possible scenarios. It could leave the price of $91,000 behind as a local low and then continue in a new price range. It can also suffer another drop to a lower range. BTC traders are still attacking long positions in a lower range before liquidating all liquidity for a new high.
Recent purchases have accumulated several hundred bitcoins from the market, enough to offset some panic sell-offs. Institutional buyers gain coins from over-the-counter trades.
