Wednesday, December 7, 2022

Bitcoin ETPs Outflows Suggests Institutional Investors Are Getting Cold Feet

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Bitcoin ETPs have been experiencing some immense outflows. These have not come as a surprise though given that the price of the digital asset had crumbled last week. It has followed the price of bitcoin falling below $40,000 once again, leading to bearish sentiment among investors. This in turn has put immense selling pressures on other investors who have gained exposure to the market using trading investment vehicles such as ETPs.

Outflows Rock Bitcoin ETPs

Before this month, Bitcoin ETPs had enjoyed a prosperous month of inflows as faith was renewed in the digital asset following its campaign above $40,000. It was the strongest month in the history of these ETPs since October last year with more than 10,000 BTC in inflow recorded. 

However, the month of April would prove to be the complete opposite as outflows so far for the month have been almost as high as inflows for the month of March and the month is not even over yet. This constitutes one of the largest outflows recorded for any month since the inception of Bitcoin ETPs. The last being in July 2021 when outflows had touched 13,849 BTC,

Related Reading | How Bitcoin Futures Premiums Exhibit Signs Of Market Exhaustion

April has been following this trend hard with more than 9,871 BTC and counting so far. Although a reversal of this trend could very well take place in the remaining days of the month. This is the second-largest outflow ever recorded and the direct effect of this has been the increased sell pressure on investors.

Bitcoin ETPs

ETPs outlfows second-largest in history | Source: Arcane Research

Nevertheless, this is not as bad of a bearish signal as some might be led to believe. A look at the July 2021 outflows shows that it coincided with the peak of the summer sell-offs, which was promptly followed by a recovery in the price of the digital asset. 

If this is the case, then this might mark the sell-offs that have been rocking the market in recent times. A bounce back from a point like this would likely put bitcoin on a path towards $55,000.

BTC On The Charts

For the better part of last week, the price of bitcoin had nested in the $40,000 support. It had eventually lost hold of this point and slid down to the $39,000 level. This would prove to be short-lived, however, as the midweek trading activities had brought the digital asset back up to $42,000.

Bitcoin price chart from TradingView.com

BTC starts another recovery trend | Source: BTCUSD on TradingView.com

Even though the asset is doing well at this point, it is a long way from $45,000 where bears are mounting some of the strongest resistance ever seen in the market. This key resistance level had been the undoing of bitcoin in the past week.

Related Reading | Halfway To The Halving: What This Means For Bitcoin

The cryptocurrency has now moved to trade above the 50-day moving average, marking a bullish trend for the short term. A translation to a bullish trend for the long-term would see the digital asset bear the key resistance area of $45,000 and traveling all the way to $48,000. Below this point, BTC continues to stand on shaky ground.

Featured image from Medium, charts from Arcane Research and TradingView.com

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