The price of Bitcoin (BTC) has continued its downtrend, dropping to new local lows of under $59,000. During the mid-hours of the United States Monday trading session, BTC briefly fell below $60,000 to hit a new local low of $58,500. This downward trend has been sustained as outflows from the U.S. spot Bitcoin exchange-traded fund (ETF) market have persisted into the new week.
The latest weekly report from the crypto exchange Bitfinex revealed that U.S. spot Bitcoin ETFs experienced losses of over $100 million each trading day last week, totaling $544.1 million in collective outflows. Analysts at the trading platform attributed these outflows to weak-handed ETF investors reacting to short-term negative news and basis/funding arbitrage unwinding due to negative funding rates.
Bitfinex highlighted the unwinding of basis/funding arbitrage as evidenced by the significant decline in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) and other platforms. The open interest on the CME dropped by $220 million in the past week, while the total aggregate open interest across other platforms also fell by more than $450 million within the same timeframe. This reduction has brought the total Bitcoin futures open interest down from the June 7 record high of $36.99 billion to $33.3 billion.
Despite the ongoing downtrend, analysts at Bitfinex suggested that BTC may be nearing its bottom as heavy ETF outflows often coincide with the formation of local bottoms. When BTC previously dipped below $70,000 in early June, U.S. spot Bitcoin ETFs documented seven consecutive days of net outflows, demonstrating the impact of sharp price movements on ETF investors’ sentiment. This pattern serves as a crucial indicator for investors to monitor, as it can provide insights into potential reversals or stabilization points in the market.
While there are indications that Bitcoin may be approaching a bottom, Bitfinex analysts cautioned that market sentiment remains bearish, particularly in the lower timeframe range (one-minute to 15-minute charts) across various crypto assets. Despite the potential for a stabilization point, ongoing negative news and funding rates continue to weigh on investor sentiment, contributing to the prevailing bearish outlook in the market.