Author: Mandy Williams, Crypto Potato; Translated by: Baishui, Golden Finance
Bitcoin (BTC) continues its downward trend, hitting a new local low below $59,000. In the middle of the U.S. trading session on Monday, BTC briefly fell below $60,000, hitting a new local low of $58,500.
The slump continued into the new week as outflows from the U.S. spot bitcoin exchange-traded fund (ETF) market continued.
The latest weekly report from cryptocurrency exchange Bitfinex shows that spot Bitcoin ETFs in the U.S. lost more than $100 million per trading day last week, with a total outflow of $544.1 million. Analysts at the trading platform said the outflows were a combination of ETF investors reacting to short-term negative news and basis/margin arbitrage liquidations due to negative funding rates.
Bitcoin holdings fall
One sign of basis/funding carry unwinding is the sharp drop in open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME) and other trading platforms, Bitfinex said.
CME’s open interest fell by $220 million in the past week, while total open interest on other platforms fell by more than $450 million during the same period. The plunge caused total open interest in Bitcoin futures to fall to $33.3 billion from a record high of $36.99 billion on June 7.
"The decline in open interest coincides with negative funding rates observed across multiple exchanges over the past week and also corresponds with net ETF outflows, suggesting a significant unwinding of funding carry trades associated with ETF flows. In light of this, it is important to acknowledge that not all ETF outflows should be interpreted as outright spot sales," the analysis noted.
Bitcoin May Be Nearing a Bottom
Citing a recent report from Bitfinex Alpha, analysts predict that BTC may be close to a bottom, as large ETF outflows (such as currently seen) tend to correlate with the formation of local bottoms.
In early June, when BTC fell below $70,000, U.S. spot Bitcoin ETFs saw net outflows for seven consecutive days, highlighting the impact that large price swings can have on investor sentiment toward ETFs.
“This pattern is critical to investors as it often provides clues to potential reversals or stabilization points in the market,” the analysts noted.
Meanwhile, Bitfinex analysts warned that market sentiment remains bearish as there is weakness on the crypto asset’s lower timeframes (one-minute to 15-minute charts).
