Have institutional investors stopped buying? Bitcoin ETF market in emergency

▲ BlackRock Bitcoin/ChatGPT generated image ©

The Bitcoin market is facing a critical test as BlackRock's IBIT has experienced eight consecutive trading days of outflows. Market analysis even suggests that institutional investors have effectively halted their buying, leading to rapidly growing caution regarding the potential breakdown of Bitcoin's $74,000 support level.

According to TradingNews, an investment specialized media outlet, on May 27 (local time), BlackRock's iShares Bitcoin Trust (IBIT) recorded a net outflow of approximately $192 million on May 26. This extended IBIT's outflow streak to eight consecutive trading days, with over $2 billion exiting the entire U.S. spot Bitcoin ETF market since May 14. Currently, IBIT's assets under management (AUM) stand at approximately $66 billion, about five times that of Fidelity's FBTC, which is in second place.

The market shock was amplified by an approximately $130 million IBIT dark pool (Block Trade) transaction that occurred on May 27. Immediately after this transaction, Bitcoin plummeted from around $78,000 to $76,500, dropping about $1,500 intraday. The media outlet analyzed that current ETF fund flows are changing the very structure of Bitcoin's price determination. It explained that while on-chain data was a key variable in the past, now ETF inflows and outflows are determining market direction.

Notably, the cumulative net inflow into the U.S. spot Bitcoin ETF market this year has only reached approximately $536 million, a significant slowdown compared to last year. The media pointed out that at similar points in previous years, cumulative net inflows were in the billions of dollars, raising concerns that institutional investment demand may have effectively entered a stagnation phase. However, the total assets under management for the entire U.S. spot Bitcoin ETF market still remain around $100 billion.

Macroeconomic variables are also burdening the market. Amidst the hawkish stance of the Federal Reserve (Fed) under the Kevin Warsh framework, the market is closely watching the U.S. Personal Consumption Expenditures (PCE) price index to be announced this Friday. The market is currently pricing in approximately an 80% chance of an additional interest rate hike by year-end, and the U.S. 10-year Treasury yield remains around 4.47%. The media analyzed that a strong dollar and a high-interest-rate environment are expanding risk-aversion sentiment across the cryptocurrency market.

The market's key support level is $74,000. The media projected that if Bitcoin closes daily below this level, further corrections could open up to the $71,000-$72,000 range, and in severe cases, to the $68,000-$70,000 range. Conversely, if IBIT's fund flows revert to net inflows of over $100 million per day, a scenario where Bitcoin recovers to $80,000-$85,000 is also possible, according to the analysis.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*