Key facts
- Bitcoin ETFs have seen $510 million in net inflows over the last three days.
- This follows an eight-week period where Bitcoin ETFs experienced outflows totaling approximately $8 billion.
- The recent inflows suggest a potential turning point in investor sentiment.
- The average cost basis for Bitcoin ETF investors is around $83,800.
- Large holders, or 'whales,' have sold over $40 billion in Bitcoin since its peak.
Bitcoin ETFs have experienced a notable shift, recording $510 million in net inflows over the past three days, signaling a potential reversal after an eight-week period of significant outflows. This recent influx marks the largest since early May, suggesting a possible turning point for investor sentiment, according to James Butterfill, head of research at 21Shares.
Despite the recent positive momentum, Bitcoin ETFs have collectively shed approximately $8 billion over the last eight weeks, a period marked by a decline in the digital asset's price to a 21-month low. This sustained selling pressure has deepened year-to-date outflows to $2.8 billion. Bitcoin itself was trading around $62,000, showing a 4% increase over the preceding week, though it had previously fallen to $58,000 from a high of $126,000 in October.
Butterfill noted that the recent outflows represented about 8% of assets under management for Bitcoin ETFs, a proportion comparable to cycle lows observed in 2018. He also highlighted that the average buyer of these ETFs entered when Bitcoin was priced around $83,800, indicating many investors are currently underwater. Furthermore, large holders, known as whales, have sold over $40 billion in Bitcoin since its peak last year, though Butterfill suggests the negative price pressure from this segment has recently eased.
Looking ahead, Butterfill cautioned that the Federal Reserve's stance on monetary policy could influence Bitcoin's trajectory. The ongoing fight against inflation and the geopolitical situation in the Middle East, particularly concerning Iran, are key factors that the Fed is monitoring. Until the Fed signals a move towards rate cuts, which would typically support Bitcoin, its price may remain range-bound, as Bitcoin remains highly sensitive to inflation outlooks and Fed policy.