Bitcoin’s (BTC) price is on the move higher on Monday afternoon after bulls fended off an early attempt by bears to push it lower, halting the slide at $41,790 and reversing course to lift BTC to a price of $42,850 at the time of writing.
The move higher comes after a weekend of trading around support at $42,000, which is near the middle of the range BTC has been trading in since the first week of December when the top crypto first managed to break above resistance at $39,000.
BTC/USD Chart by TradingView
“February Bitcoin futures prices [were] higher in early U.S. trading Monday,” said Kitco senior technical analyst Jim Wyckoff, who noted that “Bulls have negated a price downtrend on the daily bar chart.”
Bitcoin futures 1-day chart. Source: Kitco
“Bulls and bears are on a level overall near-term technical playing field, but the bulls have momentum on their side early this week,” Wyckoff said.
According to Matteo Greco, research analyst at Fineqia International, the primary focus of the market “continues to be on BTC Spot ETFs.”
“Following strong initial net inflows, the newly launched ETFs started to witness the anticipated decrease in inflows, offset by continuous outflows recorded by the Grayscale Bitcoin ETF (GBTC) post its conversion from Trust to ETF,” Greco said. “Despite approximately $405 million in outflows from BTC ETFs during the past week, the overall inflow since launch remains notably positive.”
He said the rate of outflows from GBTC “is anticipated to decrease as the surge in redemptions may have peaked,” noting that “The declining trend in redemptions was evident towards the end of the previous week, with the outflow rate decreasing from the initial daily average of $500 million observed in the initial days of trading.”
“On Thursday, GBTC saw an outflow of about $394 million and on Friday, the outflow hit its lowest point since launch at approximately $255 million,” he said. “The recent days of outflows suggest a diminishing pace of investors withdrawing funds from GBTC, indicating a potential for a more stable flow for the Grayscale product and, by extension, for BTC Spot ETFs.”
“Despite last week’s net outflow, trading volumes remain robust, underscoring continued investor interest in these financial products,” Greco said. “Since their launch, the cumulative volume of ETFs has nearly reached $25 billion, with a daily average trading volume of approximately $2.2 billion.”
“In contrast, volumes on centralized exchanges for digital assets have decreased,” he added. “From January 22nd to January 28th, the cumulative volume on centralized exchanges was $29.5 billion, similar to the volume observed one week earlier but indicating a 41.5% decrease compared to two weeks prior, shortly after the ETFs' launch, when the cumulative volume reached $50.4 billion.”
“This data supports the speculation surrounding the narrative of BTC Spot ETFs among digital asset market participants, with a peak in volume during the approval week followed by a swift decline and stabilization in trading volumes,” Greco said. “Conversely, traditional financial products have displayed a more consistent pattern, maintaining strong volume since day one and still recording about $1.7 billion in trading volume on the last Friday, reaffirming the significant impact of these products in bringing traditional finance investors into the realm of digital assets.”
Greco is not the only one expecting outflows from GBTC to slow, as analysts from JPMorgan, led by Kenneth Worthington, see a similar development occurring.
“Friday’s net inflows reversed the four-day streak of redemptions,” the analysts said in a note on Monday, while also acknowledging that the size of sales “remains small.”
“As we’ve been seeing transaction volumes slowing this past week, we think we are perhaps seeing indication of the hype around these ETFs abating and entering a perhaps more normalized flow environment,” Worthington said.
According to Bloomberg Intelligence analyst James Seyffart, outflows from GBTC have now topped $5 billion, while the gross flows for the other ETFs stand at $5.8 billion, representing a net inflow of $759 million.
Update for the #Bitcoin ETF Cointucky Derby after Friday (11 days). $5 billion out of $GBTC. Newborn 9 still offsetting those outflows with gross flows of $5.8 billion. Giving us net inflows of $759 million. Volume continued to slow. pic.twitter.com/QTJqqI4aoA
— James Seyffart (@JSeyff) January 29, 2024
