Bitcoin Drops Below $60K, Analyst Says Bitcoin ETF ‘Too Common’

Bitcoin Drops Below $60K, Analyst Says Bitcoin ETF 'Too Common'


On April 17th, the market has been waiting for the long-awaited Bitcoin devaluation event, which is expected to happen on April 20th.

According to data from Cointelegraph Markets Pro and TravingView, Bitcoin (BTC) fell from $63,814 on April 17 and fell as much as 7.5% to $59,648 intraday.

BTC/USD Daily Chart. Source: TradingView

In addition to the escalating geopolitical conflict in the Middle East, Bitcoin's price correction has recently been accelerated by demand for Bitcoin exchange-traded funds (ETFs), strengthening of the US dollar index (DXY) and weakening technical setups.

Bitcoin ETFs struggle with “zero flow” days

The April 17 red candle showed a 3 percent decline over the past 24 hours, adding to the sell-side pressure as a slowdown in momentum for the US spot Bitcoin ETF.

ETFs saw another day of net inflows totaling $58 million on April 16, according to data from Farside Investors.This came from $79.4 million and $12.9 million from Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB). , respectively.

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Spot Bitcoin ETF flow chart. Source: Farside Investors

The chart above shows that most ETF issuers have recorded zero inflows over the past few days, leaving market participants with many questions.

Bloomberg ETF analyst James Seifert explained the lackluster flows on X to his followers, noting that 83% of ETFs in the US market saw zero returns on April 14.

“On any given day, most ETFs will have a flow number of ZERO – this is very common. There are ~3,500 ETFs in the US. Yesterday, 2,903 of them had exactly zero flow.”

Seifert said the flows were not a cause for concern and that how new income streams are recorded was normal for most ETFs.

Seifert explained that ETF shares are created and redeemed when there is sufficient imbalance in supply and demand and the cost of doing so is below the hedge. In Bitcoin ETFs, these creation units range from 5,000 to 50,000 shares.

He added, “Minor imbalances allow market makers to dominate the trading of stocks, just like stocks.”

DXY has recorded a “5-day run since February 2023”.

The US Dollar Index (DXY), which tracks the dollar's performance against major world currencies, rose 2.56% from a low of 103.52 on April 10 to a 6-month high of 106.169 on April 16. 14 months.

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DXY 1-day chart. Source: TradingView

Kobe Bryant's letter stated that the dollar's strengthening is expected to result in continued high interest rates. Kobeisi's letter, posted on April 17 in X, reads in part:

“With 2 rate cuts this year, interest rate cuts are set to resume in September 2024.”

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Bloomberg Dollar Spot Index, 5-day percentage change. Source: Kobeissi Letter

Higher interest rates typically encourage foreign investors to take advantage of higher returns on bonds and time deposits, increasing demand for the dollar.

From a technical perspective, the US Dollar Index looks on its way to a November 2023 high of $106.757, up 0.87%.

RELATED: Bitcoin bids pile up above $60K on hope of BTC price rebuild

Bitcoin's critical support at $62,000 turned into resistance

Given the short-term BTC price action, traders were looking for critical levels for Bitcoin.

Earlier on April 17, independent trader and X user Ali stated that the Bitcoin UTXO Perceived Price Distribution (URPD) level of $62,000 is a “critical support” level for BTC.

“$62,000 is a critical support zone for #Bitcoin. Losing this level could shift focus to the next critical area of ​​interest around $51,500.”

URPD is an on-chain metric by Glassnode that shows the rate at which a given set of Bitcoin UTXOs are mined.

Glassnode explains that each bar represents the amount of Bitcoin that last moved within a certain price bucket, while the value on the x-axis represents the lower limit of that bucket.

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Bitcoin: UTXO realized price distribution. Source: Glassnode

BTC has since lost this support, now it has become a strong resistance area for the bulls.

According to IntoTheBlock's In/Out of the Money Around Price (IOMAP) model, over 1.15 million addresses have previously bought approximately 630,110 BTC at a price range of $62,858 to $64,670.

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Bitcoin IOMAP chart. Source: IntoTheBlock

The IOMAP chart also shows that Bitcoin is facing strong resistance compared to support on its recovery path. This suggests that the path of least resistance is down.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.

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