The cryptocurrency market has been extremely volatile since the start of the week. Bitcoin rallied to the $113K level on Tuesday but immediately reversed and is now trading below $109K on Wednesday.

The whipsaw performance resulted in hundreds of millions of dollars worth of long and short positions being liquidated from the market in the last 24 hours. More volatility is expected ahead of the CPI data release on Friday. 

Bitcoin’s volatile price action comes despite spot exchange-traded funds in the US, returning to positive territory on Tuesday. 

Data obtained from SoSoValue revealed that nine out of 12 Bitcoin funds saw net inflows yesterday, with $477.2 million added to the funds. BlackRock’s IBIT led the way with $210.9 million in inflows with Ark & 21Shares’ ARKB reporting $162.8 million in inflows, and Fidelity’s FBTC recording $34.15 million. 

Spot Bitcoin ETFs saw $7.41 billion worth of total trade volume on Tuesday, aligning with the volume recorded this month. Trading volumes have ranged between $5 billion and $9.78 billion in October, significantly higher than the average of $2-$4 billion recorded last month. 

While commenting on the market conditions,  Nick Ruck, director at LVRG Research, said,

Yesterday’s return to net positive flows signals a potential stabilization in institutional sentiment after recent volatility, suggesting renewed confidence in crypto as a portfolio diversifier amid economic uncertainties. The surge in monthly trading volumes over the past month marks an uptick in institutional engagement, which delivers deeper liquidity and risk appetite as traditional investors increasingly allocate to digital assets for yield and hedging opportunities.

The analyst added that the demand for gold has peaked, which could see investors seek alternative risk-adjusted opportunities in crypto. As such, Ruck expects Bitcoin’s price to appreciate in the near to medium term. 

Bitcoin failed to overcome the major resistance level at $114K on Tuesday despite recording excellent gains. It faced a rejection above $113K and has now dropped to the $108K region once again.

The BTC/USD 4-hour chart remains bearish as the cryptocurrency failed to build on its recent momentum. It has found strong support around the 61.8% Fibonacci retracement at $106,453 and could bounce back despite the messy price action. At press time, BTC is trading at $108,163 per coin. 

If Bitcoin fails to build on its momentum, it could dip toward the 61.8% Fibonacci retracement at $106,453. The daily candle closing below this level could extend its bearish run toward the October 10 low of $102,000.

The Relative Strength Index (RSI) on the 4-hour chart reads 54, above the neutral level, and indicates that the bullish momentum is gaining traction.

The Moving Average Convergence Divergence (MACD) also showed a bullish crossover earlier this week which remains in effect further supporting a bullish bounce. 

If the bulls take control of the market, Bitcoin could extend its gains toward the 50-day EMA at $113,608 over the next few hours.

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