The value of Bitcoin (BTC) has been on a downward spiral, slipping below the $59,000 mark during the Monday trading session in the United States. A new provisional trough was set when it tumbled past $60,000 and touched a low of $58,500.
The current weakening trend is intensified by the sustained pullback of investment from the American spot Bitcoin exchange-traded funds (ETFs) as the week opens.
In a recent update, cryptocurrency exchange Bitfinex highlighted that these U.S.-based spot Bitcoin ETFs experienced substantial daily withdrawals in excess of $100 million last week, culminating in a combined retreat of $544.1 million. Analysts at Bitfinex interpret these withdrawals as a reflex to temporary pessimistic events by short-term ETF holders and as an unraveling of the basis and funding arbitrage, which has been exacerbated by the prevalence of unfavourable funding rates.
The Downtrend in Bitcoin Open Interest
Bitfinex points to the sharp drop in Bitcoin futures positions, especially on the Chicago Mercantile Exchange (CME) as an indication of the unfurling arbitrage. The CME saw a $220 million slash in its open interest this past week. In a similar vein, the total combined open interest from various other exchanges saw a dip exceeding $450 million in the same window. This reduction has shrunk the total Bitcoin futures open interest from its June 7 peak of $36.99 billion to now stand at $33.3 billion.
Bitcoin’s Proximity to a Potential Floor
The latest Bitfinex Alpha report suggests that Bitcoin may be approaching a low point. Intensive ETF withdrawals of the kind we’re presently seeing have historically coincided with the creation of temporary price floors.
When Bitcoin stumbled below the $70,000 mark in the early days of June, it resulted in a week-long spell of consistent net outflows from U.S. spot Bitcoin ETFs, a clear signal of the impact that dramatic price fluctuations can have on the mood of ETF investors.
In addition, Bitfinex’s analysts caution that the overall market sentiment is tilting towards the negative, citing visible fragility in short-term crypto asset trends, as evidenced by the brief time frame charts (one-minute to 15-minute charts).
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