Bitcoin’s price continued its downward slide on Friday, flirting with the $55,000 level as concerns mount over sustained outflows from cryptocurrency exchange-traded funds (ETFs). The flagship cryptocurrency dipped to a low of $55,363 before showing slight recovery, trading at $56,125 by the afternoon. This 1% decline reflects the broader market uncertainty, fueled by diminished investor confidence and ongoing risk aversion.

Market analysts suggest that Bitcoin could be on the verge of a more substantial correction, with the possibility of falling further to $50,000 in the coming days. The ongoing streak of ETF outflows, coupled with broader economic concerns, has added pressure to Bitcoin’s price, prompting many traders to adopt a more cautious stance. The Crypto Fear and Greed Index has dropped to 22, signaling “extreme fear” among investors.

Seven Days of ETF Outflows

Bitcoin’s decline has coincided with a week-long streak of outflows from cryptocurrency ETFs, a key factor in the coin’s recent struggles. Data from SoSo Value indicates that on September 5, Bitcoin spot ETFs saw net outflows totaling $211 million, marking the seventh consecutive day of losses. This is the longest streak of outflows since June, signaling a growing sense of unease among institutional investors.

Fidelity’s FBTC ETF was hit the hardest, recording outflows of $149.5 million on the same day. Meanwhile, other major funds such as Bitwise’s BITB ETF and the Grayscale Bitcoin Trust (GBTC) saw outflows of $30 million and $23.2 million, respectively. As a result, the total net asset value of Bitcoin spot ETFs has dropped to $50.727 billion.

Ethereum (ETH) ETFs have also been affected by this trend. On September 5, Ethereum ETFs recorded total net outflows of $152,700, with Grayscale’s ETHE ETF losing $7.39 million. However, Grayscale’s smaller ETF, listed on the New York Stock Exchange (NYSE: ETH), bucked the trend by posting net inflows of $7.23 million, suggesting some investors are still bullish on Ethereum, even amid market volatility.

Market Sentiment and Broader Dynamics

David Morrison, a market analyst with Trade Nation, pointed to broader market dynamics as contributing factors to Bitcoin’s decline. He noted that investor sentiment has grown increasingly cautious ahead of several key economic events, including the U.S. Non-Farm Payroll report and next week’s inflation update. With the Federal Reserve’s interest rate decision looming on September 18, market participants are bracing for further volatility.

According to Morrison, “Investors appear very nervous, especially ahead of the Fed’s upcoming rate decision. Any unexpected moves could exacerbate the already shaky market conditions.”

This nervousness has been reflected in the recent liquidation data. Coin glass reported that the past 24 hours saw $98.58 million in liquidations across the cryptocurrency market, with long positions bearing the brunt at $74.11 million. This suggests that many traders are closing their positions in anticipation of further price declines.

Experts Predict Further Declines

Anndy Lian, an intergovernmental blockchain advisor, predicted that Bitcoin will likely fall below $55,000 in the short term, potentially reaching as low as $50,000. Lian tied this projection to the continued ETF outflows, noting that the sell-off began on August 30, around the same time Bitcoin started struggling to hold above $60,000.

“The outflows from ETFs have been a key driver of Bitcoin’s recent price action,” Lian said. “We’re seeing a strong correlation between these outflows and the downward pressure on Bitcoin’s price.”

Raj A. Kapoor, founder of the Blockchain Governance Council, also weighed in on the situation, highlighting the confluence of factors impacting the market. Kapoor pointed to Nvidia’s recent stock troubles as a potential catalyst for the current market downturn.

“With Nvidia’s stock plummeting after the U.S. subpoena, this event has ignited negative sentiment in the tech and crypto sectors,” Kapoor said. He went on to argue that Bitcoin’s support levels are “on thin ice,” predicting that the price could drop to $50,000 or even lower in the near future.

Conclusion: What Lies Ahead for Bitcoin?

While the immediate outlook for Bitcoin remains uncertain, some analysts believe that any decline could present an opportunity for long-term investors. Kapoor emphasized that investors should keep a close eye on key support levels, such as $56,000, $47,000, and $40,000, which could signal a potential bottom.