The American crypto ETF market is going through a turbulent period. While major funds have seen money flowing out for days in a row, analysts point to a striking turning point that they believe could prove crucial.
The question is whether investors who are now under water will put further pressure on the market, or whether it is a temporary bump in a broader trend.
Bitcoin price dips below average entry price
Figures from data researcher Glassnode show that the average entry price of American Bitcoin (BTC) ETFs is around $89,600. The Bitcoin price briefly fell below that level today. Glassnode analyst Sean Rose told Bloomberg that the average ETF investor is therefore at a loss for the first time since launch.
According to Vincent Liu of Kronos Research, there is no panic yet. He sees most Bitcoin ETF holders as long-term investors. “Even with the average cost price above the spot price, we see few quick exits.” However, he warns that the current risk-off mood in the market may play a role. If there is less liquidity, i.e. fewer buyers and sellers in the market, losses can quickly turn into additional selling pressure.
BlackRock fund leads the losses
Yesterday, US spot Bitcoin ETFs recorded another solid outflow totaling $254.6 million. BlackRock’s iShares Bitcoin Trust in particular saw a lot of money leave with $145.6 million. Funds from Fidelity, ARK 21Shares and Bitwise also surrendered millions. It was the fourth day in a row of net withdrawals from Bitcoin ETFs, with a total loss of almost $1.9 billion. Last Thursday was the second worst day since launch with an outflow of $866.7 million.
Spot Ethereum (ETH) ETFs also saw large outflows yesterday, accounting for a combined $182.7 million. BlackRock’s iShares Ethereum Trust finished at the bottom with a loss of $193 million.
Fed must move towards easing
According to Liu, a turnaround will only come when inflation falls further and the labor market cools down somewhat, but does not end up in a serious crisis. In addition, he believes, the US central bank must clearly show that it is willing to relax policy. Only then can volatility decrease and capital can flow back into crypto ETFs, among other things.
Remarkably, Solana ETFs continue to attract money. Yesterday, another $7.3 million flowed into the Bitwise Solana Staking ETF and $0.9 million into the Grayscale fund. Since their launch in late October, the two Solana ETFs have collectively recorded approximately $390 million in net inflows. Yesterday VanEck also launched a Solana fund and tomorrow it will be the turn of Fidelity and Canary Capital, as you could read earlier today.
The coming weeks should reveal whether the current turning point for Bitcoin ETFs is a temporary setback or the start of a structural turn in sentiment.
Source: https://newsbit.nl/pijn-voor-bitcoin-etfs-gemiddelde-investeerder-staat-voor-het-eerst-in-de-min/
