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Bitcoin has failed to regain its footing above $70,000, but what are the key reasons behind it? The most recent liquidations cluster data, ETF inflows and market evidence might give us some answers.
First the liquidation heatmap data shows notable sell-offs that have aided in the decrease in the price of Bitcoin. The graph shows that the $72,000, $69,000 and $66,000 levels saw significant clusters of liquidations. These liquidations show strong selling pressure because the price was forced lower by the forced closure of leveraged positions. The recent price action of Bitcoin shows that this cascading effect from liquidations frequently results in a swift and steep decline.
Second, the departure from the U.S. ETFs that track Bitcoin have been very important. After 19 days of inflows, these ETFs saw a net outflow of $64.93 million on Monday. This is noteworthy because it shows that investors are moving away from accumulation and toward profit-taking or taking less risk.
Grayscale's GBTC had the highest outflow, totaling $40 million, followed by Invesco Galaxy Digital's BTCO, Valkyrie's Bitcoin ETF and Fidelity's FBTC. The money that has been taken out of Bitcoin ETFs indicates a decline in institutional interest, despite the relatively low volume of outflows.
Alex DovbnyaThird, the dynamics of the market show a general decline in enthusiasm. Though recent outflows suggest a shift, there has been a 19-day streak of net inflows totaling over $4 billion, bringing the total net inflow for spot Bitcoin ETFs since January to $15 billion.
The overall trend has turned negative even though the only funds to record net inflows of $6 million and $8 million, respectively, were Bitwise's BITB and BlackRock's IBIT. This shift in sentiment is probably the result of profit-taking following an extended period of positive inflows, not only among institutional investors.
Yuri Molchan
Vladislav Sopov
Dan Burgin
Alex Dovbnya