Bitcoin loses almost 4% amid ETF demand concerns 📊

14:43 22 March 2024

The largest cryptocurrency, Bitcoin continues its decline, after ETFs saw a net outflow of nearly $2 billion over the past few days. Tuesday's rebound was quickly erased and the price has now fallen below $63,000.

  • Some market observers indicate that the reason for the declines is the sale of shares in Grayscale by the bankrupt Genesis platform, which already received approval to convert $1.3 billion worth of shares in February. The biggest selling of course come from GBTC, where we could see as much as $1.8 billion outflows in last few days;
  • Attention will shift to BlackRock and Fidelity ETFs, where investor activity is declining (despite BlackRock yesterday higher inflow). Potential selling from these two funds could put pressure on Bitcoin.
  • The U.S. dollar is trading up sharply today, further negatively impacting cryptocurrency market momentum. Altcoins like Dogecoin and Cardano are losing almost 5% today, while the second largest cryptocurrency Ethereum is testing the area around $3300 and losing 4.5%.

Source: XTB Research, Bloomberg Finance LP

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Bitcoin charts (H1, D1)

On the lower interval, we can see that the price of BTC is slipping coming out the bottom of a formation, resembling a head-and-shoulders (RGR). A drop below $61,000 could potentially trigger a cascading sell-off, in an extreme case wiping out almost completely the upward movement that has been going on since January. The RSI indicator on D1, near 50 points, indicates that there is still room for further cooling. At the same time, bitcoin likes to surprise investors, and the fundamentals for further growth this year seem undisturbed. Sentiment is negatively impacted by ongoing outflows from ETFs for the 4th consecutive day, where Grayscale (GBTC) continues to lead the way.

However, it is worth noting that inflows into the remaining 9 ETFs are at record lows, indicating a potential exhaustion of demand at this stage of the rally. Key on-chain levels are around $50,000 where the average of ETF investor purchases is located. The purchase price of BTC by long-term investors also runs close to this level. This one has provided significant bull market momentum support in previous cycles. For such a deep decline probably a significant correction on Wall Street would likely be needed, as at $60,000 Bitcoin will see a more than 20% correction, i.e. one of the deeper ones since the 2022 rebound.
Source: xStation5
Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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