The recent trend of Spot Bitcoin ETFs experiencing outflows for seven consecutive days is quite concerning. These outflows have been averaging around $100 million daily, totaling to approximately $1.2 billion being pulled out from the funds so far. This decline in the Bitcoin price has raised questions about the correlation between institutional sell-offs, miner sell-offs, and these outflows. The fear is that these sell-offs may continue, impacting the market further.
While the current situation is worrisome, it is not the first time that Spot Bitcoin ETFs have seen such prolonged outflows. In April-May 2024, these funds experienced seven consecutive days of heavy bleeding, surpassing the current levels of outflows. The largest single-day outflow was recorded at $563.7 million on May 1 during that period. This previous occurrence provides some insight into what could happen next.
Past Recovery Trends
After the outflows in May 2024, there was a temporary upside as the funds recorded inflows for two days before seeing outflows again. However, this initial recovery was just the beginning, as institutional investors re-entered the market. From May 13 onwards, the funds witnessed a remarkable 19 days of consecutive inflows, setting a new record. This historical data suggests that a turnaround in the current situation is plausible, especially with the recent recovery in the Bitcoin price.
Despite the recent drop in price to $60,000, Bitcoin is still trading well above its 200-day moving average of $50,613. This indicates that the long-term bullish sentiment among investors remains strong, with many choosing to hold onto their positions. However, the short and mid-term performance of the digital asset is facing challenges, as it has fallen below the critical 50-day and 100-day moving averages of $65,403 and $63,928, respectively.
On the daily chart, there are some positive signs emerging for Bitcoin. The daily trading volume has increased by 35%, and the price has managed to climb back above the $61,000 resistance level. These developments hint at a potential reversal in the current downward trend, especially if the historical pattern of inflows following outflows repeats itself.
The recent outflows in Spot Bitcoin ETFs are indeed a cause for concern, but history shows that these situations can be temporary. The market has exhibited resilience in the past, with strong inflows following prolonged outflows. As long as the long-term bullish sentiment remains intact and the market fundamentals stay strong, there is a good chance of seeing a positive turnaround soon. Investors should monitor the situation closely and consider the historical patterns as a guide for making informed decisions in this volatile market.
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