Bitcoin Algos Tracking ETF Flows Cited for Token’s Swings in Asia
In recent days, the level of demand for spot-Bitcoin exchange-traded funds (ETFs) has been closely monitored in the crypto market. Asian trading hours have seen a decline in Bitcoin prices as investors withdraw their funds from these ETFs. This data is automatically scraped by algorithmic trading bots, which then make buying and selling decisions based on the information. The introduction of US Bitcoin ETFs in January has attracted a net inflow of $12 billion so far, with the highest level of inflows occurring in the first half of March. However, there have been periods of outflows since then, and Bitcoin is currently down 11% from its all-time high.
The impact of algorithmic protocols offloading Bitcoin has spilled over into the derivatives market, leading to the liquidation of approximately $354 million worth of bullish crypto bets on Tuesday. Compared to gold, Bitcoin has a higher proportion (5.5%) of its total supply held in ETFs. Consequently, ETF flows are considered more significant for Bitcoin than for gold. Bitcoin experienced a nearly 6% drop on Tuesday and is still struggling to gain momentum, partly due to diminishing expectations of Federal Reserve interest-rate cuts. However, some traders believe that the upcoming halving of new Bitcoin tokens this month could support prices.
Jakob Kronbichler, co-founder of Clearpool Finance, noted that market behavior has been influenced by ETF flow numbers, and the recent correction in Bitcoin prices is seen as a natural breather for the market after weeks of excitement.
