Bitcoin Price Surges Despite Outflows from US-Listed Spot Bitcoin ETFs
The price of Bitcoin demonstrated remarkable resilience on Wednesday, experiencing a surge of nearly 10% even in the face of significant outflows from US-listed spot Bitcoin Exchange-Traded Funds (ETFs). This positive performance comes as the overall cryptocurrency market has been upbeat following the Federal Reserve’s two-day policy meeting, which maintained interest rates and hinted at potential rate cuts later in the year.
TLDR
- Bitcoin’s price surged by nearly 10% on Wednesday, despite significant outflows from US-listed spot Bitcoin ETFs.
- The Grayscale Bitcoin Trust (GBTC) and Invesco Galaxy Bitcoin ETF (BTCO) experienced the most substantial losses, with a total of $742 million in outflows this week.
- Despite the ETF outflows, Bitcoin’s market performance has been resilient, with the cryptocurrency rebounding from a dip to $60,775 to a high of $68,100.
- Federal Reserve Chair Jerome Powell’s dovish stance and the Fed’s maintained projection for three rate cuts this year have contributed to Bitcoin’s recovery.
- Analysts suggest that the current Bitcoin bull cycle is far from over, as short-term holder investment and valuation metrics remain outside the typical market top zone.
Data from Farside Investors reveals that Bitcoin ETFs experienced a substantial withdrawal of approximately $742 million this week. The Grayscale Bitcoin Trust (GBTC) and Invesco Galaxy Bitcoin ETF (BTCO) were the most affected, with GBTC seeing an outflow of $386.6 million and BTCO losing $10.2 million.
Despite these significant capital outflows, Bitcoin’s market performance remained strong. The cryptocurrency rebounded from a dip to $60,775 and reached a high of $68,100 before settling at $66,640 during early Thursday trading.
The recovery in Bitcoin’s price coincided with Federal Reserve Chair Jerome Powell expressing a dovish stance. Despite rising inflation, the Fed maintained its projection for three rate cuts this year.
This development highlights the complex relationship between institutional movements and cryptocurrency valuations. Bitcoin’s robust demand has allowed it to withstand negative institutional pressures.
Analysts from CryptoQuant offer a longer-term outlook, suggesting that the current Bitcoin bull cycle is far from over. According to their data, short-term holder investment only comprises 48% of total Bitcoin investment. This figure historically reaches 84%-92% at the end of a bull cycle.
Furthermore, valuation metrics such as the CryptoQuant P&L Index remain outside the typical market top zone and continue to maintain a position above the 1-year moving average.
Broad Cryptocurrency Market Growth
In addition to Bitcoin’s resilience, the broader cryptocurrency market also experienced growth. Ether rose by 1.2% to reach $3,379.43 on Wednesday. Other cryptocurrencies like Matic, Solana, and Dogecoin also posted gains.
Stocks connected to cryptocurrencies also performed well. Companies such as Coinbase, MicroStrategy, Iris Energy, CleanSpark, Riot Platforms, and Marathon Digital saw positive results.
Pullbacks in Bitcoin Bull Markets
While there has been a recent downturn caused by short-term holders cashing out their Bitcoin holdings and subsequent liquidation of long positions on margin trading platforms, experts believe that such pullbacks are normal occurrences in Bitcoin bull markets.
However, caution is advised if Bitcoin’s price drops below the $60,000 mark. This could potentially signal a more significant downturn and test the $50,000 to $52,000 range.
Hot Take: Bitcoin’s Resilience Amidst ETF Outflows
Despite significant outflows from US-listed spot Bitcoin ETFs, Bitcoin’s price has demonstrated remarkable resilience, surging by nearly 10% on Wednesday. This positive performance can be attributed to factors such as Federal Reserve Chair Jerome Powell’s dovish stance and the Fed’s maintained projection for three rate cuts this year. Analysts suggest that the current Bitcoin bull cycle is far from over, as short-term holder investment and valuation metrics remain outside the typical market top zone. While there has been a recent downturn in the broader cryptocurrency market, experts believe that pullbacks are normal occurrences in Bitcoin bull markets. However, caution is advised if Bitcoin’s price drops below the $60,000 mark.
Sources: Farside Investors
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