Bitcoin (BTC) has continued its downtrend, reaching new local lows of under $59,000. During the mid-hours of the United States Monday trading session, BTC briefly fell below $60,000 to register a new local low of $58,500.
This slump has persisted as outflows from the U.S. spot Bitcoin exchange-traded fund (ETF) market have continued into the new week. The latest weekly report from the crypto exchange Bitfinex revealed that U.S. spot Bitcoin ETFs lost over $100 million each trading day last week, amounting to $544.1 million in collective outflows.
Analysts at the trading platform said the outflows are a combination of weak-handed ETF investors reacting to short-term negative news and basis/funding arbitrage unwinding due to negative funding rates. According to Bitfinex, one of the signs of the unwinding of basis/funding arbitrage is the steep decline in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) and other trading platforms.
Potential Bottom for BTC?
Citing the last Bitfinex Alpha report, analysts predicted that BTC could be nearing its bottom, as heavy ETF outflows, like those being seen, often correlate with the formation of local bottoms. When BTC dropped below $70,000 in early June, U.S. spot Bitcoin ETFs recorded seven consecutive days of net outflows, highlighting the effect of sharp price movements on ETF investors’ sentiment.
Market Sentiment Remains Bearish
Meanwhile, Bitfinex analysts have warned that market sentiment remains bearish, as there is a weakness in the lower timeframe range (one-minute to 15-minute charts) across crypto assets. The open interest on the CME fell by $220 million in the past week, with the overall aggregate open interest across other platforms slumping by more than $450 million within the same timeframe.
Overall, the continuous downtrend of Bitcoin, coupled with the significant outflows from the U.S. spot Bitcoin ETF market, indicates a challenging time for the leading cryptocurrency. The unwinding of funding arbitrage trades and the potential formation of a bottom for BTC suggest that investors need to closely monitor the market sentiment and price movements in the coming days to assess any potential reversals or stabilization points within the market.
