By Joseph Dahrieh, Managing Director of Tickmill

Bitcoin edged lower after its recent rebound, with renewed pressure from continued outflows in spot Bitcoin ETFs. The products recorded another day of net redemptions on Monday, with roughly US$91 million withdrawn. While the pace of outflows has moderated, the trend has continued to weigh on sentiment in recent weeks.

Macroeconomic expectations are also adding pressure. Strong U.S. labor market data last week reinforced the view that the Federal Reserve may keep policy restrictive for longer, with this week’s inflation data likely to be closely watched. Headline and core inflation are expected to remain above the Fed’s target, which could push Treasury yields higher and reduce the relative appeal of risk assets, including Bitcoin. Expectations of tighter policy from the European Central Bank and the Bank of Japan are adding to the challenging backdrop.

At the same time, improving sentiment around Middle East negotiations has supported broader market confidence and may provide some support for cryptocurrencies. Looking ahead, inflation data and central bank signals are likely to remain the main drivers of Bitcoin’s direction, while ETF flows continue to act as an important gauge of investor conviction.