Sell Warning Light on Bitcoin... Institutional Funds Outflow and Short Positions Surge

▲ Bitcoin plummet/ChatGPT generated image ©

As Bitcoin (BTC) has been pushed down to the key support level of $76,455, the combination of spot ETF outflows and an increase in short positions is heightening the possibility of further declines.

According to investment specialized media FXStreet on November 3 (local time), Bitcoin, after falling approximately 2% the previous day, was trading at $76,553 today, testing the 200-day exponential moving average (EMA) of $76,455. This price is a major support level that gauges long-term trends, and analysis suggests that if the daily candle closes below this level, the downtrend could deepen further. The aftermath of last week's Binance security breach and uncertainties surrounding the US midterm elections are also pressuring investor sentiment, limiting Bitcoin's rebound.

Institutional investor demand is also weakening. According to SoSoValue, US Bitcoin spot exchange-traded funds (ETFs) recorded a net outflow of $398.62 million in a single day on the 2nd. This follows a net outflow of $202.59 million last week, with funds continuing to exit since the beginning of this week. FXStreet analyzed that if net outflows from spot ETFs persist or their scale expands, Bitcoin's price correction could intensify further.

In the derivatives market, bearish bets are strengthening. According to Coinglass, Bitcoin futures open interest has continued to increase since mid-October, reaching 701,440 BTC today, the highest level since September 23. An increase in open interest during a price decline suggests the possibility of new short positions entering the market. On the same day, the Long/Short Ratio was 0.91, close to its lowest level in about a month. A ratio below 1 means that relatively more investors anticipate a price drop.

Technical indicators also show a dominance of selling pressure. Bitcoin is trading below its 100-day moving average of $77,774, and the daily Relative Strength Index (RSI) is at 34, approaching the oversold zone. The Moving Average Convergence Divergence (MACD) histogram also remains in negative territory, indicating sustained downward pressure. If a rebound is successful, $77,774 will act as the first resistance level, after which the 50-day moving average of $80,098 and the horizontal resistance zone of $85,000 are expected to limit further upside.

Conversely, if Bitcoin consistently falls below the 200-day moving average of $76,455, there is a risk of entering a deeper correction phase. If this support level is maintained, there remains a possibility of a short-term rebound towards the upper moving averages. FXStreet assessed that in a situation where spot ETF outflows and an expansion of bearish positions in the futures market are occurring simultaneously, the defense of $76,455 is a key variable determining Bitcoin's short-term direction.

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