Bitcoin On Track for Worst Week in Months as ETF Demand Falters

Elijah Nicholson-Messmer and Sidhartha Shukla, Bloomberg News

A Bitcoin logo on an automated teller machine (ATM) for cryptocurrencies at a crypto exchange kiosk in Warsaw, Poland, on Thursday, March 14, 2024. , Damian Lemanski/Bloomberg

(Bloomberg) -- Bitcoin has peeled back more than 10% from its all-time high as the appetite for fledgling spot Bitcoin exchange-traded funds moderates, putting the cryptocurrency on pace for its worse week since August.

The group of 10 spot Bitcoin ETFs is on track to record its biggest weekly outflow since the products debuted on Jan. 11. Meanwhile, the world’s largest cryptocurrency is set for one of its worst weeks of the year after a roughly 6.5% retreat. The token was down 2.5% to $63,820 on Friday.

“With BTC approaching 60K off the back of declining ETF flows, liquidations, and speculation of delays in an Ether ETF, the markets are frantically searching for a positive catalyst to support any moves higher,” said Chris Newhouse, DeFi analyst at Cumberland Labs.

Bitcoin “still looks overbought,” JPMorgan Chase and Co. strategists warned, renewing a February call for further declines leading up to April’s highly-anticipated halving event, which will lower the supply of newly minted Bitcoin from miners.

Sustained open interest in CME Bitcoin futures along with declining ETF flows are significant bearish signals for the price of Bitcoin, the strategists led by Nikolaos Panigirtzoglou wrote in a note Thursday.

“The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow,” the strategists wrote. “This challenges the notion that the spot Bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow. As we approach the halving event this profit taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.”

Read more: How Spot Bitcoin ETFs Became Big Win for Wall Street: QuickTake

Last month, the bank predicted that the price of Bitcoin will drift down toward $42,000 after April as “Bitcoin-halving-induced euphoria subsides.”

A net $836 million was pulled from the ETFs from Monday through Thursday, reflecting outflows from the Grayscale Bitcoin Trust and a moderation in subscriptions for rival offerings from the likes of BlackRock Inc. and Fidelity Investments.

The funds have garnered net inflows of $11.3 billion to date, data compiled by Bloomberg show, still one of the most successful debuts for an ETF category. The Grayscale Bitcoin Trust, which was converted into an ETF, has seen $13.6 billion of outflows.

“This past week those inflows have slowed, which could mean that — at least for the time being — interest in BTC ETFs is plateauing,” said Michael Safai, co-founder at quantitative trading firm Dexterity Capital.

Despite Bitcoin setting a record of almost $73,798 on March 14, enthusiasm among retail traders may be waning, according to Naeem Aslam, chief investment officer at Zaye Capital Markets.

“The fact that the rally didn’t really take off from the all-time high like before made many question the strength of the rally,” Aslam said. “The halving is almost here and if this event fails to really keep the momentum going, then it means that we are going to face serious retracement, which means that the price could fall below $50,000.”

--With assistance from Jackie Edwards and David Pan.

(Update with Bitcoin price and ETF flows)