Bitcoin Investment Products Record Fourth Week of Net Outflows, What’s Next?

by

As an analyst with several years of experience in the cryptocurrency market, I’ve seen my fair share of price fluctuations and market trends. The recent report from CoinShares indicating consecutive weeks of outflows for Bitcoin investment products, particularly spot Bitcoin ETFs, is a cause for concern but not unexpected given the volatility of the market.

According to CoinShares’ most recent update, cryptocurrency investment products experienced a fourth successive week of withdrawals, amounting to $251 million. A significant portion of these withdrawals, approximately $156 million, originated from spot Bitcoin ETFs.

Based on CoinShares’ data, the average cost to buy a single Bitcoin through these ETFs since their creation is approximately $62,200. A 10% decrease from this figure might have triggered automated selling. However, there has been a recent change in Bitcoin ETF trends: outflows in the previous week were followed by positive inflows over the past two trading sessions. It’s noteworthy that Grayscale’s GBTC has experienced net purchases for two consecutive days.

Analyzing the recent trends in digital asset transfers, it’s worth noting that Bitcoin experienced a net withdrawal of approximately $284 million. Intriguingly, this is the sole digital currency to exhibit such a pattern. Conversely, Ethereum (ETH) managed to halt its 7-week streak of outflows with an inflow of around $30 million during the previous week.

As a researcher studying the cryptocurrency market, I’ve noticed some intriguing inflows into various altcoins recently. Specifically, Avalanche, Cardano, and Polkadot attracted notable investments of $0.5 million, $0.4 million, and $0.3 million respectively. The standout news, however, came from the launch of Hong Kong’s Bitcoin and Ethereum ETFs, which saw impressive net inflows of over $307 million during their first week.

Bitcoin Price Action

Last week, Bitcoin’s (BTC) price dipped as low as $57,000. However, the tide turned when unexpectedly strong jobless data was released. This unexpected development fueled speculation that the Federal Reserve might announce interest rate cuts sooner than anticipated. If true, this would lead to an influx of liquidity in the market, potentially boosting the performance of riskier assets such as stocks and cryptocurrencies like Bitcoin.

At present, Bitcoin is priced at around $63,360 and boasts a market capitalization of approximately $1.245 trillion. Crypto analyst Michael van de Poppe expects the trend to persist within its current boundaries. He underscores the significance of the $60,500 mark, explaining that if it remains intact, there’s a strong likelihood of Bitcoin reaching $70,000 by the end of the next 1-2 months.

#Bitcoin looking for continuation within this range.

Crucial level for me is the $60.5K level.

If that holds, then there’s a likely chance of continuation to $70K in the upcoming 1-2 months.

— Michaël van de Poppe (@CryptoMichNL) May 7, 2024

Due to Bitcoin’s (BTC) price surge lately, options traders are now reconsidering the possibility that the cryptocurrency could hit the $100,000 threshold at some point in 2021.

As a researcher studying the cryptocurrency market, I’ve observed a significant increase in the request for Bitcoin call options on Deribit exchange and OTC networks. These options are designed to capitalize on a predicted price spike, with targets set at new highs beyond $75,000, even reaching $100,000.

As an analyst at QCP Capital, I’ve observed some bullish momentum in volatility and interest rates since the price rebound from last Friday and over the weekend. In the Bitcoin market, risk reversals have shifted, with calls now costing more than puts. Furthermore, there’s a growing appetite for September expiry BTC call options with strikes at $75,000 and $100,000.

Read More

2024-05-07 18:50