Rocky US economy, private credit stress, war impact Bitcoin’s odds for $75K rally

Key takeaways:

Private credit risks and weak US jobs market data drive Bitcoin lower, but is there a silver lining?
Institutional Bitcoin ETF outflows and miner sales test BTC's strength, but the Federal Reserve's options for addressing the federal deficit may also favor scarce assets.

Bitcoin (BTC) faced rejection at $69,000 on Wednesday after President Donald Trump's speech failed to guarantee an end to the war in Iran. Oil prices soared following the speech and beyond traders’ war-related worries, tumult in the private credit markets is also taking a toll on investor confidence across multiple markets.

While Bitcoin has successfully defended the $66,000 level throughout the week, traders remain concerned about downside risk over the upcoming weekend, as US and European markets will be closed on Friday for Easter.

Crude WTI oil (left) vs. Bitcoin/USD (right). Source: TradingView

The threat of additional US-led military action in Iran caused WTI crude oil prices to rally above $110, triggering a move away from risky assets. Traders chose to cut their exposure to Bitcoin and stocks as the US Treasury Department expressed concerns regarding the $2 trillion private credit markets on Wednesday. Domestic and international insurance regulators will be surveyed through early May.

Private credit markets sound the alarm: Will BTC respond?

Blue Owl, a $307 billion alternative asset manager, announced "extraordinary redemption requests" for two of its private credit funds in shareholder letters issued Thursday. Over 70% of the companies Blue Owl lends to are in the software industry, as reported during a quarterly earnings call. The fund manager capped withdrawal requests at 5%, adding fresh concerns to the credit market.

Adding to the short-term bearish sentiment among traders was a surge in US continuing jobless claims, which rose to 1.84 million for the week ending March 21, up from 1.82 million the week prior. This data is not inherently negative for equities; however, as the global outplacement firm Challenger, Gray & Christmas noted, most layoffs originated from companies "shifting budgets toward AI investments at the expense of jobs."

US federal gross debt, USD trillions (left) vs. percentage of GDP (right). Source: crfb.org

The odds of economic stimulus initiatives amid weakening economic activity could ultimately support Bitcoin's price in the medium term. The US federal deficit is expected to reach a massive $1.9 trillion in 2026, leaving little room to maneuver other than injecting liquidity, which tends to benefit scarce assets.

An improvement in the risk perception of Bitcoin will be decisive for a potential rally above $75,000. There has been a considerable negative impact from net outflows from US-listed spot exchange-traded funds (ETFs), the liquidation of positions held by companies that previously focused on building corporate reserves, and the unwinding by publicly listed miners.

US-listed spot Bitcoin ETFs daily net flows, USD. Source: Farside Investors

US-listed Bitcoin ETFs have seen $450 million in net outflows since March 24, which serves as a proxy for weak institutional demand. Traders fear further selling pressure because the industry holds $88 billion in Bitcoin under management, with BlackRock’s iShares Bitcoin Trust (IBIT US) leading at $53.9 billion. However, these outflows should slow if Bitcoin continues to show strength near $66,000.

MARA Holdings (MARA US) announced the sale of 15,133 BTC in March at a price far below the company’s estimated cost basis. Meanwhile, Riot Platforms (RIOT US) reportedly transferred 500 BTC for sale on Wednesday. Additionally, Nakamoto Holdings (NAKA US) disclosed a sale of 284 BTC, despite having previously announced its intention to continue accumulating the asset.

As long as companies such as Strategy (MSTR US) and Metaplanet (MTPLF US) continue to absorb some of this selling pressure, investors will likely recognize that Bitcoin serves as a safeguard against increasing money supply. Governments will do everything possible to avoid a recession, raising the odds that Bitcoin’s path to $75,000 stays firmly in play despite worsening macroeconomic conditions.