More "forced sales" ahead?  The purpose of the Bitcoin ETF holding falls by 51% in the largest outflow ever

More “forced sales” ahead? The purpose of the Bitcoin ETF holding falls by 51% in the largest outflow ever – Mail Bonus

Canada’s Purpose Bitcoin ETF (BTCC) witnessed its Bitcoin (BTC) holdings halved in just one day, indicating a sharp decline in sentiment among the most experienced cryptocurrency investors.

The purpose of the Bitcoin ETF has been reduced by 51% of the AUM

The fund’s holdings decreased from $ 47,818 BTC to $ 23,307 BTC between June 16 and 17, the lowest level since October 2021. A 51% decrease in BTC holdings is also the largest daily outflow since its inception.

Purpose of Bitcoin ETF holding. Source: Glassnode

Interestingly, another Canadian cryptocurrency fund, called the 3iQ CoinShares Bitcoin ETF, witnessed a similar outflow, falling from 23,917 BTC on June 1 to 12,668 BTC on June 17, suggesting that the massive BTC withdrawal of the purpose was not an isolated event.

3iQ CoinShares Bitcoin ETF holdings. Source: Glassnode

More “forced sales” of Bitcoin ahead?

The outflow came in the middle of Bitcoin’s short break below $ 20,000, a psychological support level that topped the 2017 bull run. In particular, BTC prices fell to around $ 17,570 on June 20, only to recover $ 21,000 two days later.

BTC / USD daily price. Source: TradingView

Nevertheless, the Bitcoin giant’s vomiting of the funds left evidence of a record high redemption rate among their institutional clients, which is believed to have been triggered by fears that BTC would hold back its bear run below $ 20,000 in 2022.

“I’m not sure how they perform redemptions, but there’s a lot of physical BTC to sell in a short amount of time,” noted Arthur Hayes, former CEO of BitMEX Encryption Exchange, added:

“Given the poor state of risk management among #cryptocurrency lenders and overly generous lending terms, expect more pockets of forced sales of $ BTC and $ ETH as mrkt finds out who is swimming naked.”

It’s “easier” now to go below $ 20K

Bitcoin ETF outflows are associated with declining buying sentiment in riskier assets, led by the Central Bank. extreme stance against rising inflation.

In particular, Bitcoin has fallen by more than 70% since its record high of $ 69,000 in November 2021, mainly plagued by the Central Bank’s reference rate hikes and the systematic and total relaxation of the $ 9 trillion balance sheet.

The US Federal Reserve cut interest rates by 75 basis points on June 15, the highest since 1994. At the same time, its “point plot” shows the goal of bringing lending rates to 3.4% by the end of 2022 from the current 1.5-1.75%. bili.

FOMC assessment of future interest rates. Source: Ecoinometrics

That would mean more increases into the year, which in turn could hurt risk appetite even further, limiting the recovery potential of Bitcoin, as well as the stock market.

Related: How to survive in the bear market? Tips for beginners

“The biggest issue I see at the moment is the global recession, which is just around the corner,” said Paweł Łaskarzewski, co-CEO of Synapse Network’s Distributed Finance (DeFi) platform, adding:

“Because of this, trade and institutions are too scared and do not have the same capital as they had a year ago. So because of a shallower market, it is much easier to break the $ 20,000 line as there may not be enough capital to take it back. “

BTC points to beware of

Bitcoin is likely to retest $ 17,000- $ 18,000 as support will all be secured unless BTC prices fall below $ 20,000 again.

At the same time, continued sales could cause BTC to fall to $ 14,000, which is the peak in May 2019. Interestingly, Bitcoin’s Volume Profile Visible Range (VSVR) further indicates that the $ 8,000- $ 10,000 range is dominant in terms of trading activity.

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