Cryptocurrency investment flows fall to $270 million amid Bitcoin profit-taking
December 2, 2024
Cryptocurrency investment flows saw a sharp decline last week, falling to $270 million, indicating a slowdown after consecutive weeks of strong activity.
Year-to-date inflows have reached a record $37.3 billion, reflecting the continued growth in institutional interest in cryptocurrencies despite market volatility.
Cryptocurrency Flows Decline Amid Profit-Taking
Bitcoin saw a massive outflow of $457 million last week, marking the first significant pullback since early September. This follows a series of positive inflows into digital asset investment products as BTC reached new highs. Specifically, inflows reached $3.12 billion in the previous week.
Macroeconomic trends also played a role. Two weeks ago, inflows reached $2.2 billion as optimism about a Republican victory in the US elections and a more flexible Fed stance boosted investor sentiment.
However, the momentum appears to be fading. After the initial surge after the election, inflows have moderated. Last week’s figures also reflect a significant pullback from the $1.98 billion seen immediately after the election. James Butterfill of CoinShares attributes the sell-off to profit-taking after Bitcoin approached the psychological $100,000 level.
“We believe this is profit-taking after Bitcoin tests the psychological $100,000 level,” Butterfill wrote.
Vess revealed his decision to exit all long positions at $97,800, reflecting caution among veteran traders. The analyst expressed doubts about Bitcoin’s ability to sustain its breakout above $100,000 this year.
In contrast, the bullish sentiment persists. Tom Lee of Fundstrat remains bullish, predicting that Bitcoin will reach $250,000 by the end of 2025. However, Lee’s team acknowledges the possibility of short-term setbacks, with some predicting a drop to $60,000 before resuming its upward trajectory.
Robert Kiyosaki, author of Rich Dad Poor Dad, echoed this sentiment but pointed out that any dip is an opportunity to buy for long-term accumulation.
“Bitcoin is stuck below $100,000. That means BTC could crash to $60,000. If and when that happens, I won’t sell,” Kiyosaki said.
While Bitcoin has faced outflows, Ethereum has seen a massive inflow of $634 million, indicating renewed investor confidence in the asset. Ethereum’s inflows since the beginning of the year have reached $2.2 billion, supported by a growing shift in sentiment as traders shift to altcoins amid short-term uncertainty for Bitcoin.
The cryptocurrency exchange-traded products (ETPs) market saw a decline in trading volumes, falling to $22 billion last week from $34 billion the week before.
Even with the introduction of options on U.S. ETFs, their impact on overall market volumes has been limited. This development raises concerns about the level of institutional interest in these financial instruments.
