The value of Bitcoin (BTC) rose nearly 10% on Wednesday. This increase bucked the prevailing trend of net outflows from US-listed spot Bitcoin exchange-traded funds (ETFs).
A significant amount of around $742 million was withdrawn from these funds this week. Notably, there was a significant outflow of $261.5 million on March 20 alone.
Why is the Bitcoin bull cycle far from over?
Farside Investors provided data that showed a stark contrast between inflows and outflows within the sector. The Grayscale Bitcoin Trust (GBTC) and the Invesco Galaxy Bitcoin ETF (BTCO) saw the biggest losses, dropping $386.6 million and $10.2 million, respectively.
Consequently, the modest inflows into other approved funds have hardly affected the overall outflow scenario.
Read more: How to Trade a Bitcoin ETF: A Step-by-Step Approach
| Date | It will work | FBTC | BITB | ARKB | BTCO | BC | BRRR | HODL | BTCW | GBTC | In total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 18th | 451.5 | 5.9 | 17.6 | 2.7 | 0.0 | 0.0 | 4.8 | 5.7 | 0.0 | -642.5 | -154.3 |
| 19th March | 75.2 | 39.6 | 2.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -443.5 | -326.2 |
| March, 20th | 49.3 | 12.9 | 18.6 | 23.3 | -10.2 | 19.0 | 2.9 | 9.3 | 0.0 | -386.6 | -261.5 |
Bitcoin ETF flow table. Source: Farside Investors
Despite these heavy capital outflows, Bitcoin’s market performance has been remarkably resilient. After falling to $60,775 on Wednesday, BTC rallied to a high of $68,100. It was later adjusted to $66,640 early Thursday.
This rebound came as Federal Reserve Chairman Jerome Powell expressed a dovish stance. Additionally, the Fed maintained its forecast for three rate cuts this year, even as inflation rises.
The market dynamics of ETF outflows versus Bitcoin price appreciation highlight the complicated relationship between institutional movements and cryptocurrency valuations. While ETF outflows usually indicate bearish sentiment, Bitcoin's strong demand suggests otherwise and highlights its ability to withstand negative institutional pressure.
Additionally, analysts at CryptoQuant have provided a longer-term outlook that suggests the Bitcoin bull cycle is far from over. The company’s data suggests that current investment inflows from short-term holders represent 48% of total Bitcoin investments. Historically, this value is between 84% and 92% at the end of a bull cycle.
Additionally, valuation metrics such as the CryptoQuant P&L Index remain outside the typical upper market zone and remain above the 1-year moving average.
Read more: Bitcoin price prediction 2024/2025/2030
Bitcoin profit and loss index. Source: CryptoQuant
This suggests that despite market volatility and ETF outflows, Bitcoin's valuation is not in the range that traditionally signals an impending market downturn.
Disclaimer
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