Bitcoin outflows, altcoin inflows: Is a crypto market shift underway?

(Kitco News) – Digital asset investment products recorded their fourth consecutive week of outflows during the week ending May 3, with collective assets under management (AUM) decreasing by $251 million to $84.86 billion.

It was also “the first week that there were any measurable outflows from the recently issued ETFs in the US, which saw outflows of $156 million last week,” said James Butterfill, Head of Research at CoinShares. “We estimate that the average purchase price of these ETFs since launch is $62,200 per Bitcoin (Bitcoin), as the price fell 10% below this level, it may have triggered automatic sell orders.”

Outflows from spot BTC ETFs mean the US accounted for most of the decline in AUM, with outflows of $504 million, while Switzerland, Canada and Germany recorded withdrawals of $9.8 million, $9 .6 million and US$7.3 million, respectively.

“The bright spot from last week was the successful launch of spot-based Bitcoin and Ethereum ETFs in Hong Kong, which saw inflows of $307 million in the first week of trading,” said Butterfill.

In an unusual turn of events, Bitcoin was the only token to see outflows, with $284 million withdrawn from funds, while Ethereum (ETH) broke its seven-week outflow streak to record inflows of $30 million.

“A wide range of altcoins saw inflows, with the most significant being Avalanche, Cardano and Polkadot, registering $0.5 million, $0.4 million and $0.3 million respectively,” said Butterfill.

Foreign exchange flows decrease

Another set of flow data that cryptocurrency investors are watching is Bitcoin flows on cryptocurrency exchanges, which recently hit their lowest point in nearly a decade, suggesting that a bullish revival is on the horizon.

As shown in the chart provided by CryptoQuant analyst Axel Adler, Bitcoin flows on exchanges sit at 20,000 Bitcoin, the lowest the market has seen since 2015.

At the same time, Adler noted that long-term hodlers have also stopped distributing their tokens and started reaccumulating, which has been historically bullish.

Data provided by Alternative shows that overall sentiment in the crypto market remains in “greed” territory, which some analysts say means more weakness is needed to ensure excess froth is cleared from the market.

But according to For analyst Kripto Mevsimi, this could soon change, as “we are approaching the ‘gray line’ [in the chart below]which serves as an optimism/pessimism threshold for the crypto market.”

“The blue line, which represents the proportion of the Bitcoin supply currently in profit, is notably high,” said Mevsimi. “This generally indicates that a significant portion of the market may be considering taking gains, potentially leading to increased selling pressure. Historically, these elevated levels have often preceded market volatility and potential recessions as holders began to liquidate their positions.”

As the metric approaches the gray line, “market participants must be vigilant; Crossing below this line could lead to a deeper price correction,” he warned. “However, if we remain above this line, market sentiment will likely remain positive and any correction may be short-lived.”

“Profitability is a crucial factor in market psychology, especially when macroeconomic conditions, such as current unfavorable economic expansionary monetary policies, do not favor risky assets,” concluded Mevsimi. “Participants should carefully monitor these dynamics as they can significantly influence market movements.”

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. This is not a request to carry out any exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and/or damage arising from the use of this publication.

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