Bitcoin Struggles to Reach All-Time High as Outflows Impact ETFs
Despite a strong recovery in recent days, Bitcoin is still facing challenges in its attempt to reclaim its all-time high. The cryptocurrency’s bounce from $60,000 to $68,000 has restored confidence in the market, but it continues to grapple with certain obstacles.
Outflows Shake Up Bitcoin ETFs
In recent months, Spot Bitcoin ETFs have experienced significant inflows, setting new records. This influx of funds led to large institutional players like BlackRock accumulating a substantial number of coins, contributing to Bitcoin’s surge to new all-time highs.
However, as investors become accustomed to Spot Bitcoin ETFs being part of their daily investment strategies, outflows have started to increase. One major contributor to these outflows is the Grayscale Spot Bitcoin ETF, which has high fees that deter investors. This was evident back in January when such outflows triggered a market crash.
Over the past few days, outflows have dominated the net flows of ETFs. Coinglass data reveals that net flows turned negative on March 18, with $154.3 million flowing out of the funds. The following day saw an even higher outflow of $326.2 million, and on March 20, another $261.5 million left the funds.
This is the first time since January that Spot Bitcoin ETFs have experienced three consecutive days of outflows. This is in stark contrast to the previous week when daily inflows reached a new all-time high of $1.04 billion on March 12.
BTC Price Under Pressure from Selling
The current selling pressure on Bitcoin mirrors what was observed in January after the United States Securities and Exchange Commission (SEC) approved Spot Bitcoin ETFs for trading. During that time, the BTC price experienced significant drops, falling as low as $38,000.
However, as Grayscale outflows slowed down, the Bitcoin price began to recover, allowing demand to catch up with supply. Once again, the outflows are primarily driven by Grayscale. Until these outflows subside, Bitcoin could continue to decline.
Nevertheless, a reversal from this point could give Bitcoin the momentum it needs. A surge similar to what was seen after the January outflows ended could easily push the price past $75,000, setting a new all-time high for the cryptocurrency.
Currently, BTC is trading at $67,320, with a 5.51% increase in the last 24 hours.
Hot Take: Conclusion
The recent challenges faced by Bitcoin in its quest for an all-time high highlight the impact of outflows from Spot Bitcoin ETFs. As investors flee from these funds due to high fees, the cryptocurrency’s price is under pressure. However, if outflows slow down and demand catches up with supply once again, Bitcoin could see a significant surge and surpass its previous all-time high.
It will be interesting to see how these dynamics play out in the coming weeks and whether Bitcoin can overcome these obstacles to reach new heights.
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