Bitcoin encounters potential profit-taking and price vulnerabilities despite increasing institutional acquisitions. Renowned trader Skew highlighted the risks on July 23, addressing the resurgence in the popularity of US Bitcoin exchange-traded funds (ETFs). Although these ETFs generated over $500 million in revenue, Skew cautioned that the bullish trend might not be sustainable.
Are ETFs a Double-Edged Sword?
Following the influx of $526 million into BlackRock iShares Bitcoin Trust (IBIT) on June 22, historical patterns suggest that such significant inflows often precede Bitcoin price declines. IBIT has exhibited bullish trends in similar scenarios, typically around market supply zones.
Data from various sources, including UK-based Farside Investors, indicated that the total net flow of US spot ETF funds on July 23 reached 533.6 million, the highest since March. Despite the BTC/USD pair witnessing all-time high levels, the market experienced a 25% drop.
Can Demand Sustain Bitcoin’s Momentum?
Skew emphasized the need for consistent spot demand, robust spot buyer activity, and overall seller absorption to maintain current levels. As of the latest data, Bitcoin traded at $66,876, reflecting a 1.5% daily decline.
Inferences for Investors
Key Takeaways for Investors:
- Monitor ETF inflows as they can indicate upcoming price movements.
- Evaluate market supply zones to predict potential bullish or bearish trends.
- Consistent spot demand is crucial for sustaining price levels.
- Be cautious of historical patterns that suggest profit-taking following large inflows.
- Keep an eye on institutional purchase activities for market sentiment insights.
Meanwhile, Ethereum ETF funds have not produced a significant price increase for ETH. Despite the launch of spot Ethereum products on July 23, the ETH/USD pair only showed a marginal 1.5% rise last week. This lack of positive reaction contrasts sharply with Bitcoin’s behavior during its ETF fund launch, signaling possible market hesitations.
Trading firm QCP Capital noted that the absence of a positive reaction is itself a negative sign, suggesting that market participants might be waiting to sell the news.