Market Analysis: Bitcoin Futures and Spot ETF Trends Amid Current Decline
Bitcoin has recently shown a bearish trend, moving outside its established range of $110,000 to $90,000. February has seen significant outflows from spot ETFs totaling $3.4 billion, coinciding with a notable 12.48% drop in Bitcoin value. Analysts are divided on market trends, with some suggesting potential buying opportunities amid fear, while cautioning others to wait for more robust indicators before acting.
The Bitcoin (BTC) daily chart has exhibited a bearish three-blind mice pattern during the last three days, causing its value to fall outside the previously established long-term range of $110,000 to $90,000. Over the past 24 hours, Bitcoin has tested the fair value gap but has struggled to gain bullish momentum from the low of around $82,000.
In February, the spot Bitcoin exchange-traded funds (ETFs) have experienced severe outflows, totaling $3.4 billion. From February 24 to February 27, Bitcoin underwent a considerable drawdown of 12.48%, coinciding with an extensive period of spot BTC ETF outflows. Data gathered from SoSoValue highlighted that the entire spot ETF market experienced an outflow of $2.4 billion in just this week, with February 25 marking the steepest ETF outflow of $1.13 billion since its inception.
According to crypto analyst Adam, there has been a decline in demand for spot BTC ETFs during the current market correction. Historical trends suggest that significant ETF inflows or outflows have often preceded price reversals. Adam noted that in the past 14 instances, Bitcoin’s price has only aligned with the flow direction once, suggesting that the current panic may lead to contrarian market movements. He offered this insight: “Generally, people see a big red number and start panic selling, or vice versa, which ends up sending the market in the opposite direction.”
Despite the challenges, Adam speculated that a potential relief rally may occur soon. Conversely, market analyst Zaheer indicated that the dropping spot prices and ETF net flows might be related to the CME futures basis declining below 5%. He explained that as the risk-free rate range is breached, many participants unwind their positions, contributing to a notable decrease in CME futures open interest and reflecting diminished investor confidence.
Additionally, the Crypto Fear & Greed Index reached its lowest level since 2022, indicating extreme fear among investors with a score of 10. According to Ben Simpson, founder of Collective Shift, such extreme fear could represent a favorable buying opportunity, adhering to the successful strategy of purchasing during fear and selling during greed. However, Axel Adler Jr., an on-chain market researcher, cautioned that the 30-day moving average of the index has yet to dip below the 50th percentile, a traditional precursor to Bitcoin price reversals. Adler suggested that it would be prudent to observe market trends in the coming days before making investment decisions.
In summary, Bitcoin has faced significant selling pressure, resulting in notable outflows from spot ETFs and a decline outside its historical trading range. Analysts express mixed opinions on potential upcoming market movements, with some viewing the current extreme fear as a possible buying opportunity. Observing the indicators and market trends will be crucial for investors as they navigate the evolving landscape.
Original Source: cointelegraph.com
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