The recent trend of outflows in Spot Bitcoin ETFs is certainly alarming, especially when considering the seven consecutive days of outflows averaging around $100 million daily. This has led to a total of $1.2 billion being pulled out from these funds so far. The correlation between these outflows and the decline in the Bitcoin price suggests that institutional sell-offs and miner sell-offs may be driving this trend.
Comparing Past Trends
Looking back at a similar period in April-May 2024, when Spot Bitcoin ETFs experienced 7 consecutive days of outflows to an even higher degree, may provide some insight into the current situation. The largest single-day outflow of $563.7 million was recorded in May 2024. Following this period of outflows, there was a brief turnaround with inflows for two days before seeing outflows again. However, this was just the beginning of a recovery as institutional investors re-entered the market and drove 19 consecutive days of inflows, setting a new record.
If history is any indication, we could see a turnaround soon for Spot Bitcoin ETFs, especially with the recovery in the Bitcoin price. The previous trend in May 2024 proved that a significant inflow of funds is possible after a period of outflows, leading to a surge in prices as demand grows. The current Bitcoin price, despite recent drops, remains above the 200-day moving average, suggesting long-term bullish sentiment among investors who are opting to hold rather than sell.
While the long-term outlook may be positive, the short and mid-term performance of Bitcoin on shorter timeframes is less promising. The cryptocurrency has fallen below its 50-day and 100-day moving averages, which are crucial indicators for short and mid-term performance. However, on the daily chart, there are signs of potential upside with a 35% increase in trading volume and a price recovery above the $61,000 resistance level.
The current trend of outflows in Spot Bitcoin ETFs may be concerning, but history tells us that a turnaround could be on the horizon. With institutional investors likely to re-enter the market and drive inflows, a surge in prices could be imminent. While short-term performance may be lackluster, the long-term bullish sentiment remains intact, especially as investors continue to hold on to their Bitcoin. The next few days will be crucial in determining whether Spot Bitcoin ETFs will see a repeat of the recovery witnessed in May 2024.
