Bitcoin (BTC) Bottom Statement from Bitfinex Analysts: “This Data Deserves Attention!”
Bitfinex analysts have examined the recent decline in Bitcoin and the significant outflows in ETFs.
While the leading cryptocurrency Bitcoin experienced a downward trend following its all-time high in March and the halving in April, BTC briefly dropped below $60,000 yesterday evening, hitting a new local low of $58,500.
As this decline persists in US spot Bitcoin ETFs this week, Bitfinex analysts have assessed the recent decline in BTC and the substantial outflows in ETFs.
According to the analysts, the outflows and declines in BTC ETFs were the result of weak-handed ETF investors reacting to short-term negative news and the unwinding of basis/funding arbitrage due to negative funding rates.
One signal that the basis/funding arbitrage is loosening, according to analysts, is the sharp decline in open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME) and other trading platforms.
The reduction in Bitcoin futures open interest, in conjunction with the negative funding rates and ETF outflows observed on various exchanges over the past week, indicates a significant unwinding of funding arbitrage transactions associated with ETF flows.
Analysts have stated that despite the BTC sales by the German government and the general market, MicroStrategy’s recent purchase of 11,931 BTC worth $786 million provided some balance to the market. They also said that intense ETF outflows are generally associated with the formation of local bottoms.
The analysts believe that BTC may be approaching the bottom due to ETF outflows, stating that “The intense ETF outflows did not directly translate into spot BTC sales. Additionally, historical data shows that ETF outflows often precede the formation of local bottoms in the BTC price. This pattern (ETF outflows and price declines) is critical for investors to follow because it often provides clues to potential reversals in the market.”
While ETF outflows have signaled a bottom for Bitcoin, Bitfinex analysts have warned investors that market sentiment remains bearish as BTC and cryptocurrencies still show weakness on lower timeframes (one-minute to 15-minute charts).
*This is not investment advice.
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