Spot Bitcoin exchange-traded funds (ETFs) posted the first day of negative flows on August 27 after two weeks of consistent inflows.
Bitcoin outflows reached $127 million, marking the first time that the flows had turned negative in a long time. These negative flows also coincided with a drop in Bitcoin prices as the king of cryptos posted its largest decline since the rally that started last weekend.
The BlackRock iShares Bitcoin ETF saw zero flows, similar to Fidelity. The ARK ETF had the highest outflows at $102M, while Bitwise saw $6.8M in outflows.
Bitcoin Drops Below $60K
Bitcoin made a notable rally last weekend that saw prices touch nearly $65K. As reported by ZyCrypto, the gains stirred bullish conversations around BTC, with analysts anticipating a rally to all-time highs.
However, this rally was cut short on Tuesday as Bitcoin wiped gains and plunged below $60K. BTC has since slightly recovered to trade at $59,199 at the time of writing.
In an X post, CryptoQuant attributed several factors to the drop in Bitcoin prices from $65K to $58K within two days.
The first is the behavior of short-term Bitcoin holders. After BTC hit $64,000, these holders hastily sold to scoop profits after previously sitting on a loss of 17%. Therefore, once the price rallied above $64,000, they sold to mitigate further downside risk.
Short-Term Holders created a resistance level at their break-even price.Earlier this month, Bitcoin price saw a sharp price drop as well.This placed the average holding of short-term holders at a 17% loss. Price moved back to the average cost basis, allowing them to sell… pic.twitter.com/TJOGcMTQnS
— CryptoQuant.com (@cryptoquant_com) August 28, 2024
The on-chain analytics platform further noted that the price drop could have been because of intense trading activities by speculative traders.
After Bitcoin started the recent uptrend, traders started taking long positions, speculating that BTC would rise further. Open Interest surged by 31% since August 5. Such many leveraged trades tend to cause price instability and corrections.
An inflow of Bitcoin to exchanges over the past month also saw traders quickly dump after the uptrend showed signs of weakening. Data from CryptoQuant shows significant spikes in Bitcoin exchange inflows after the prices attempted to rally last weekend.
(Source: CryptoQuant) Institutions Seek More Exposure to Bitcoin
The recent development comes as institutions seek to expand their Bitcoin portfolio. US stock exchange Nasdaq has filed with the US Securities and Exchange Commission (SEC) to launch and trade options through a Bitcoin Index.
If this product launches, traders can access a secure and regulated way of accessing Bitcoin options.
The product could further elevate the demand for Bitcoin, which will help drive price gains.
