The Purpose Bitcoin ETF (BTCC) in Canada has seen its Bitcoin (BTC) holdings halve in just one day, signaling a disturbing dip in buying sentiment among more seasoned cryptocurrency investors.
The purpose of the Bitcoin ETF has been reduced 51% of the assets under management
The fund’s holdings fell from $47,818 to 23,307 bitcoins between June 16-17, the lowest level since October 2021. The 51% drop in bitcoin holdings is also the largest daily inflow ever.
The purpose of the Bitcoin ETF holdings. Source: Glassnode
Interestingly, another Canadian crypto fund, called the 3iQ CoinShares Bitcoin ETF, saw similar outflows, dropping from 23,917 BTC on June 1 to 12,668 BTC on June 17, indicating that the massive BTC withdrawal from purpose was not an isolated event. .
3iQ CoinShares Bitcoin ETF Holdings. Source: Glassnode
More ‘forced selling’ of bitcoin in the future?
The outflows came on the cusp of Bitcoin’s brief breakout below $20,000, a psychological support level that served as the top during the 2017 bull run. Notably, BTC’s price dropped to around $17,570 on June 20, only to recover $21,000 two days later. .
BTC/USD daily price chart. Source: TradingView
However, the fund’s giant Bitcoin has left behind evidence of record-high redemption rates by its institutional clients, presumably based on fears that BTC will resume its slide below $2022 in 2022.
“I am not sure how the redemptions will be carried out, but there is a lot of physical BTC to sell in a short time frame,” said Arthur Hayes, former CEO of crypto exchange BitMEX, adding:
“Given the poor risk profile of crypto #lenders and generous lending terms, expect more pockets of forced selling of BTC and $ETH as mrkt finds out who is swimming naked.”
Breaking under $20,000 is ‘easier’ now
Bitcoin ETF outflows are linked to waning buying sentiment in riskier assets, led by the Federal Reserve’s very hawkish stance against rising inflation.
Notably, bitcoin has tumbled more than 70% from its high of $69,000 in November 2021, plagued mainly by the Fed’s record interest rate hike and the systematic and complete dismantling of a $9 trillion balance sheet.
The US central bank cut interest rates by 75 basis points on June 15, the highest level since 1994. Meanwhile, the “point chart” reveals its goal of pushing lending rates to 3.4% by the end of 2022 against the current 1.5-1.75% range.
The Federal Open Market Committee’s assessment of future interest rates. Source: Environmental Measurements
That could mean more rallies for the year, which in turn could hurt risk appetite even further, limiting the potential for bitcoin and stock market recovery.
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“The biggest problem I see right now is the global recession, and it’s just around the corner,” said Bowie Skarziowski, co-CEO of the decentralized finance (DeFi) platform Synapse Network, adding:
“Because of this, retail and institutional are very scared and they don’t have the same capital firepower they had a year ago. So given the shallow market market, it is much easier to break the $20,000 streak because there may not be enough capital to get it back.”
BTC Levels to Watch out for
The probability of Bitcoin retesting $17,000 – $18,000 as support is guaranteed if BTC price drops below $20,000 again.
Meanwhile, continued selling could bring BTC down to $14,000, the highest price in May 2019. Interestingly, the visible range of Bitcoin Volume Profile (VSVR) also points to the $8,000-$10,000 range as the most significant range. Spread based on trading activity.
