As traders reprice risk as new year euphoria wanes, U.S. spot Bitcoin exchange-traded funds had a three-day run of withdrawals on Thursday.
According to Farside data, Bitcoin ETFs had $205.5 million in withdrawals for the day, resulting in a three-day cumulative netflow of $934.8 million.
Only two days since the start of the year have inflows exceeded outflows. Nevertheless, the 7-day net flow, which is the total of all flows within a specific time period, is still positive at $240.7 million.
ETF flows frequently reflect mood in the cryptocurrency market, despite being a lagging signal. Additionally, they support the underlying price direction of an asset.
The gains in Bitcoin so far this year have decreased by half, from 8% on Wednesday to 4% on Thursday. According to CoinGecko data, the leading cryptocurrency is trading flat over the past 24 hours at $91,100 after momentarily falling below $90,000 yesterday.
According to Sean Dawson, head of research at the on-chain options platform Derive, "it's not surprising to see ETF investors doing a bit of de-risking," he told Decrypt. "Rather than a sudden collapse in underlying demand, the current flows are more indicative of tactical positioning and sentiment shifts."
He attributed the continuous outflow to a number of factors, including capital reallocation after year-end, Bitcoin's inability to overcome resistance at roughly $92,000, heightened macroeconomic uncertainty in the wake of the U.S. operation in Venezuela, and deteriorating U.S. economic indicators like rising jobless claims.
A large on-chain supply wall coincides with the decline in ETF demand. According to Glassnode's analysis on Wednesday, the start-of-year gain sent Bitcoin beyond $94,000 and into a zone dominated by recent top buyers, whose cost basis is closely packed between $92,100 and $117,400.
According to Glassnode analysts, "the market now faces rising breakeven sell-side pressure, as these investors regain the opportunity to exit positions without realizing losses."
"Therefore, it will probably take time and perseverance to absorb this overhead supply in any attempt to revive a sustained bull phase."
Dawson pointed to the options market and observed that the "early-January upside chase" was coming to an end, with the short-dated call skew turning negative once more as momentum faltered.
"The market anticipates consolidation over the next few weeks, and overall, upside looks capped," he stated. The next important level to keep an eye on is the short-term holder cost base of $98,900 if Bitcoin stabilizes and attempts another rebound rally.
