Bitcoin price stagnates amid lull in ETF flows, but on-chain data suggests 300% rally

(Kitco News) –Bitcoin (Bitcoin) finds itself struggling to hold support at $61,000 in early trading Thursday as the absence of any major catalyst left traders disheartened, while the threat of higher interest rates for longer dampened demand for risky assets.

Data provided by TradingView shows that a late bear effort on Wednesday broke support at $62,000, with Bitcoin hitting a low of $60,605 in the early morning hours of Thursday before bulls managed to halt the drop and push it back above $62,000.

BTC/USD Chart by TradingView

At the time of writing, BTC is trading at $62,220, up 0.28% on the 24-hour chart.

With the absence of any major catalyst on the horizon and halving in the rearview mirror, exchange-traded fund (ETF) flows are the main focus for investors and the data leaves a lot to be desired.

According to For Farside, flows into US-listed ETFs were nearly flat on Wednesday, with ten of the eleven products recording zero net flows, while the Bitwise Bitcoin ETF (BITB) recorded $11.5 million in inflows. .

Overall, the week was positive from a net flow perspective, as on Monday there were inflows of US$217 million, while a net outflow of US$15.7 million was recorded on Tuesday. This brings the current weekly total to $212.8 million in inflows, indicating that flows are beginning to stabilize.

At the global level, a report provided by Fineqia International shows that cryptocurrency-related exchange-traded products (ETPs) have seen “64% growth in total assets under management (AUM) year-to-date (YTD) amid continued interest of investors.”

But it wasn’t just an increase, as “on a monthly basis, total AUM fell to $81 billion from $94.4 billion at the end of March, marking a 14.2% reduction,” the report said.

“The total market value of digital assets decreased by 18.8% to around US$2.29 trillion from US$2.82 trillion in April,” Finequia analysts said. “Even amid the market decline, digital asset-backed financial products maintained a 24.5% premium over the digital asset market, consistent with the trend observed in the first quarter. Year-to-date, ETPs holding digital assets have increased by 64% in AUM, while the market capitalization of digital assets has increased by 29.2%. This highlights premium growth for ETPs of approximately 117% compared to the relative underlying.”

They noted that the increase in premium is largely attributed to the launch of spot BTC ETFs in the US, which “stimulated capital flows into financial products featuring digital assets as underlying assets throughout the first quarter.”

“It is now fully prepared,” said Bundeep Singh Rangar, CEO of Fineqia. “With the initial rise of the SEC yeast effect having cooled, the loaves are ready and being served on ETF and ETN shelves around the world.”

Last week I saw the launch of three Bitcoin and three Ether (ETH) ETFs in Hong Kong, and “the UK is poised to follow suit soon,” the report states. “Countries such as Singapore, Japan, South Korea and Thailand are actively building more enabling regulatory environments. These efforts align with those of some other countries, such as Australia, Brazil, Canada, Germany, Liechtenstein and Switzerland, which have previously permitted such products.”

“During April, BTC price fell 13.6% to $60,150 from $69,650 at the end of March,” the analysts noted. “Simultaneously, the AUM of ETPs with BTC as the underlying asset suffered a 13.2% reduction, falling to $63.2 billion from the $72.8 billion recorded at the end of March.”

“These numbers emphasize a neutral flow throughout April, with the reduction in AUM perfectly reflecting the decline in the price of the underlying asset,” they stated. “YTD, ETPs holding BTC have seen an increase of 77.7%, while the price of BTC has increased by 42.2%. This highlights an 84% premium growth for financial products with BTC as the underlying asset in 2024.”

It was a similar story for Ether, which fell 14.9% in value in April, coinciding with “the AUM of ETH-denominated ETPs [decreasing] by 16.4%, falling to 12 billion dollars from the 14.3 billion registered at the end of March”, added the report. “YTD, ETPs holding ETH have seen an increase of 26.6%, while the price of ETH has grown by 31.1%.”

“This emphasizes how the growing expectation among market participants of the SEC rejecting approval of ETH Spot ETFs in May has led to a decrease in institutional exposure to ETH in favor of BTC,” the analysts said.

ETPs representing a diversified basket of cryptocurrencies, along with those representing an index of alternative currencies, also saw significant declines in April, highlighting the extent of the pullback following the bull market recovery that began in January 2023.

While ETF inflows are underwhelming and suggest sideways price action for now, crypto investor Elija has provided a reason to be bullish from a network perspective, noting that Bitcoin network fundamentals “indicate a 300% gain over at the current level,” meaning Bitcoin’s top for this cycle “could be somewhere between $250,000 and $275,000.”

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