Bitcoin ETFs See Recovery Despite Market Challenges

Amidst a tough market for BTC and other digital assets, Bitcoin exchange-traded funds (ETFs) experienced a rebound on Monday.

After a four-day streak of outflows, spot Bitcoin ETFs saw a total of $562 million in inflows, following last week’s $1.5 billion in outflows, according to data from SoSoValue.

However, analysts warn that ETFs and the broader market may continue to face pressure from institutional selling and macro uncertainty. In the short term, support may remain around the ETF cost basis level of $84,000.

The inflows coincided with a bounce back for Bitcoin on Monday, with the price briefly dipping below $75,000 over the weekend before surging to an intraday high above $79,000, according to CoinGecko.

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As the outflows of ETFs continue to impact the market, Galaxy Digital’s head of research, Alex Thorn, shared in a market update on X that Bitcoin’s price has now fallen below the ETF flow cost basis.

Thorn noted that BTC is currently trading 7.3% lower than the average ETF create cost basis of $84k, with a dip as low as 10% below that level on Saturday, Jan. 31.

He also highlighted Bitcoin’s realized price of $56,000, stating that historically, BTC has found support “around or slightly below” this level before entering a bull market.

James Butterfill, head of research at CoinShares, pointed out several factors contributing to the current market conditions, including unfavorable capital flows, Bitcoin’s decoupling from global money supply trends, and geopolitical tensions. He also mentioned the uncertainty surrounding US monetary policy with Kevin Warsh’s designation as Federal Reserve Chair.

However, Butterfill remains optimistic about the long-term outlook, citing structural concerns about currency depreciation and the potential for catch-up with liquidity trends.

In their latest report, CoinShares revealed that crypto exchange-traded products saw a significant outflow of $1.7 billion last week, doubling the outflows from the previous week.

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