The recent trend in Bitcoin ETF net inflows has stirred considerable debate within the cryptocurrency investment sphere. As per Spot On Chain, a crypto sleuth, March 21, 2024, marked the fourth consecutive trading day of negative net inflow, totaling -$94 million. This streak, not observed since January 25, has ignited discussions about the trajectory of Bitcoin’s market sentiment and institutional investment patterns.
Despite the prolonged outflow streak, there are indications that the rate of outflows is decelerating. However, the cumulative total net inflow after 49 trading days now stands at a modest $11.32 billion, reflecting a cautious approach from investors, particularly in the face of lower inflows from larger Spot ETFs like $IBIT.
As highlighted by SKew, an analyst, this negative net inflow scenario has inadvertently created a “wall of worry” situation for Bitcoin, prompting investors to weigh the risks against the potential rewards carefully. This change in sentiment and positioning underscores the importance of analyzing market data and trading in alignment with market trends.
Renowned Bitcoin analyst Willy Woo has highlighted a notable discrepancy between ETF investors and self-custody investors during recent market fluctuations. While ETF investors exhibited a reactionary stance, withdrawing approximately $1.6 billion, the Bitcoin network witnessed total net inflows of $1.1 billion, indicating a significant influx of capital from self-custody investors.
Despite the current deceleration in Bitcoin spot ETF netflows, CryptoQuant CEO Ki Young Ju suggests that this trend could potentially reverse if Bitcoin approaches critical support levels. Additionally, insights provided by Ju shed light on the behavior of new whales in the market, particularly those identified as ETF buyers, who have established a $56,000 on-chain cost basis.
In assessing historical data, Ju notes that corrections in bull markets typically entail a maximum drawdown of approximately 30%, with a maximum pain point identified at $51,000. Data from JPMorgan also suggests that Bitcoin is currently in the ‘overbought’ category.
