to leave a comment.
▲ Bitcoin (BTC), decline / ChatGPT generated image
Amid continued expectations of a bull market, signs of a large-scale outflow of professional institutional funds have been detected in the Bitcoin (Bitcoin, BTC) market. Despite expectations of an agreement on the U.S. crypto market structure bill and news of additional purchases by major companies, on-chain analysis suggests that Wall Street funds are already moving to realize profits and avoid risks.
According to cryptocurrency YouTube channel Coin Bureau on May 20 (local time), host Guy Turner revealed that $648 million flowed out of U.S. spot Bitcoin ETFs in a single day on May 18. This marks the largest daily outflow since January. This outflow was led by BlackRock's IBIT, which recorded $448 million, and Fidelity's FBTC also saw $63 million redeemed. As a result, over $1.5 billion of cumulative inflows disappeared in just two weeks. Turner stated, “The capital that flowed in last March proved to be tactical funds that were quickly liquidated due to macroeconomic volatility.” He diagnosed that institutional investors are currently the marginal sellers determining short-term prices.
Futures, options, and on-chain indicators have also uniformly turned to a selling bias, increasing downward pressure. The cumulative volume delta indicator, which shows the strength of execution in the spot market, plummeted from $16.9 million to minus $126.2 million during the recent price decline. Two large selling spikes exceeding $1 billion each also occurred, pushing the price below $77,000. In the derivatives market, the 25-delta put skew rose by 32% from 10.9% to 14.4%. This indicates a sharp increase in premium costs for downside protection. On-chain data shows that exchange holdings increased by approximately 20,000 BTC since May 11, accumulating a potential selling volume of $1.53 billion.
If Bitcoin loses its $76,000 support level, the average purchase price of Strategy, the largest whale company, could emerge as a new pressure factor for the market. Strategy recently invested approximately $2 billion to purchase an additional 24,869 BTC, increasing its total holdings to 843,738 BTC. Its average purchase price is around $75,700. If the Bitcoin price falls below the $75,500 level on a daily basis, the world's largest Bitcoin-holding company will enter a loss zone. Michael Saylor, CEO of Strategy, stated in the Q1 earnings announcement that “Strategy may sell Bitcoin for dividend payments or financial statement management.” This remark was pointed out as a factor that cracked the narrative of the unconditional buyer that the market had trusted.
The macroeconomic environment is also burdening risk assets across the board. The U.S. April Producer Price Index (PPI) recorded 6% and the Consumer Price Index (CPI) recorded 3.8%, reigniting inflation concerns. Consequently, expectations for interest rate cuts at the beginning of the year weakened, and the probability of interest rate hikes by year-end rose to 28%. The U.S. 30-year Treasury yield surpassed 5%, its highest level since July 2007. WTI crude oil prices also rose by 3.34% weekly. Bitcoin's 30-day correlation with Nasdaq exceeded 0.7, indicating its sensitivity to macroeconomic liquidity pressure, similar to high-beta tech stocks.
According to Glassnode data, on May 4, when Bitcoin was above $82,000, long-term holders put an average of $180 million worth of profit-taking sales on the market daily. In contrast, short-term investors who entered near the peak showed signs of late capitulation, depositing 10,200 BTC worth of loss-making assets to exchanges after the price drop. Analysis suggests that for the bearish structure to be invalidated in the next two weeks, a recovery of the 200-day moving average at $81,267 and the $78,500 level is needed. A stabilization of the 30-year Treasury yield below 5% and a shift to net inflows of over $100 million for 3 to 5 consecutive days in spot ETF funds were also presented as key conditions for confirming a technical bottom.
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
Newsletter
Get key news delivered to your email every morning