Bitcoin's Price Drops as Investors Brace for Halving Event Amidst Increasing Bitcoin ETF Outflows
Summary:
Bitcoin's price continues to drop as investors await the Bitcoin halving event, with contributing factors including a slowing of inflows into Bitcoin ETFs and a strengthening U.S. Dollar Index. The majority of ETF issuers recorded zero flows in recent days, leading to increased sell-side pressure. A key support level for Bitcoin at $62,000 has now become a point of significant resistance. The price of Bitcoin faces strong resistance in its recovery path compared to the support it enjoys on the downside, suggesting a downward trend.
The price of Bitcoin (BTC) maintained its negative trend on April 17 as investors anxiously awaited the highly anticipated Bitcoin halving event slated for April 20. Market information from Cointelegraph Markets Pro and TradingView indicated a fall in BTC from an opening stand of $63,814 on April 17, dropping by as much as 7.5% to an intra-day low of $59,648. The BTC/USD daily chart was sourced from TradingView. Alongside the risen tensions in the Middle East, factors such as a sluggish spot Bitcoin ETF demand, the strengthening of the U.S. Dollar Index (DXY) and a weakening technical setup have culminated in the recent accelerated decline of Bitcoin’s rate.
The April 17 trading day ended with a red candle reflecting a 3% decrease from last 24 hours. With the consequential slowing down of funds flowing into spot Bitcoin exchange-traded funds (ETFs), selling pressure was inevitably increased. Data from Farside Investors indicated that the US spot Bitcoin ETFs had another day of net outflows, equal to $58 million on April 16. This decline was further catalysed by fund outflows from Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB) amounting to $79.4 million and $12.9 million respectively.
The table from Farside Investors demonstrated that the majority of ETF issuers had zero flow in recent days, leaving market watchers puzzled. Bloomberg ETF analyst James Seyffart offered insight into this situation on X by explaining on April 14 that nearly 83% of all ETFs experienced zero inflows. He clarified that ETF shares are only created and redeemed when the disparity in supply and demand is sizable and the cost of doing it is less than hedging; for Bitcoin ETFs, this equated to units ranging from 5,000 to 50,000 shares.
The recent strengthening of the US Dollar Index (DXY) has been associated with the anticipation of persistently higher interest rates. The index, which quantifies the USD’s value against the world's top currencies, increased by 2.56% from its April 10 low of 103.52 to a six-month high on April 16 at 106.169. This was DXY’s best five-day run in 14 months. High interest rates usually trigger foreign investors to gain from more returns on bonds and term deposits, leading to increased dollar demand. From a technical slant, the U.S. Dollar Index appears set to increase more than 0.87% towards the November 2023 high at $106.757.
Looking at recent BTC price movement, traders sought key importance levels for Bitcoin. Independent trader and X user Ali identified, by the use of Bitcoin’s UTXO realized price distribution (URPD) on April 17, that the $62,000 mark was a vital support level for Bitcoin. However, Bitcoin has since slipped past this support, consequently becoming an area of substantial resistance. More than 1.15 million addresses previously purchased about 630,110 BTC at a $62,858 to $64,670 price range. The In/Out of the Money Around Price (IOMAP) model from IntoTheBlock exhibited that Bitcoin encountered substantial resistance in its recovery track as opposed to the support it had on the lower end. Therefore, it appears the downward path was the path of least resistance.
This article offers no investment advice or recommendations. Every investment and trading move has an associate risk, and readers would do well to conduct their own due diligence prior to making any decision.
Published At
4/17/2024 7:36:34 PM
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