Spot ETF Buying Slows As Bitcoin Slides Into Danger Zone

Spot ETF Buying Slows As Bitcoin Slides Into Danger Zone
  • Spot Bitcoin ETFs experienced net outflows for four consecutive days, with recent data indicating a US$340.9m one-day reduction.
  • Despite significant outflows, analysts view this market correction as a natural cooldown from record-breaking ETF inflows.
  • With the Bitcoin Halving event approaching, further profit-taking and market adjustments are anticipated.

Spot Bitcoin ETFs have had net outflows for four days in a row. The latest data from Bloomberg analyst James Seyffart shows minus US$340.9m (AU$518m) in net flows (so including BTC bought and sold via these ETFs) for the most recent trading day. 

$12.1 mln into $BITB.
$2 mln into $ARKB
$3.8 mln into $EZBC

Nothing else available yet. Current net flows for the day = -$340.9 million

— James Seyffart (@JSeyff) March 21, 2024

Related: Bitcoin Rallies on Favourable FOMC Meeting Outcome

The chart below from BitMEX Research shows data up to 20 March with combined outflows of US$742m (AU$1.1bn), bringing the recent total to over US$1bn (AU$1.5bn).

Spot Bitcoin ETF flows, source: BitMEX Research via X

Outflows Likely to Continue, Says Analyst

The negative flows come after one of the strongest and hence possibly challenging to sustain ETF (exchange-traded funds) introductions in history. Remember these ETFs have gained so much attention and inflows that the best performer of the bunch—BlackRock’s IIBIT, which saw US$848m (AU$1.28bn) inflows at the height—has entered the top 100 ETFs.

A lot of records have been broken by these ETFs—such as a whopping US$1bn (AU$1.5bn) in daily inflows last week. So, it’s only natural for things to calm down a little. JPMorgan strategist Nikolaos Panigirtzoglou predicts continued profit-taking ahead of the Halving event, especially as the market remains overbought despite recent corrections.

The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow. As we approach the Halving event this profit taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.

Nikolaos Panigirtzoglou

GBTC Sets New All-Time Record

Meanwhile, Grayscale’s GBTC fund continues with record outflows, with US$1.4bn (AU$2.1bn) leaving this week alone, doubling the outflows of any other ETF this year and setting a historical record for the highest cumulative outflows ever for an ETF, according to Bloomberg’s Eric Balchunas. 

Despite this, the ETF analyst says it still holds the 3rd position in annual revenue among 3,400 ETFs. Most recent outflows out of GBTC are US$359m (AU$545m) BitMEX Research reported.

US$13bn (AU$19.8bn) has exited the GBTC fund, source: Katie Greifeld via Bloomberg/ X

Bitcoin Slides Into Danger Zone: Analyst

Popular analyst RektCapital says it has only been two days since Bitcoin entered its ‘Danger Zone.’ In the past the Pre-Halving Retraces started 14-28 days before the Halving. Now 26 days from the Halving, BTC has already retracted nearly -18% since last week. The analyst therefore says the potential for further downside remains within this critical time window.

Source: RektCapital via Tradingview/ X

A recent Coinbase report notes that Bitcoin Halvings, which occurred in November 2012, July 2016, and May 2020, are typically seen as bullish because they reduce new BTC supply.

Related: SEC Investigates Crypto Firms Amid Ethereum Probe, Dampening ETF Hopes

Historical data reveals BTC’s price rose by an average of 61% in the six months before past Halvings and surged 348% in the six months after, Coinbase states. 

However, the report also concluded that Halvings effect on Bitcoin’s price can vary significantly. Bitcoin doesn’t operate in a vacuum and while potentially having an effect on price “there’s still only limited historical evidence about this relationship, making it somewhat speculative.”

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