Bitcoin ETF Flows Have Shifted to Strong OutflowsAlso Corporate Bitcoin Buying Rebounds & Bitcoin Is Approaching a Critical Test
Welcome to Ecoinometrics’ Friday edition. Each week, we analyze the three most critical market signals impacting Bitcoin and macro assets, delivering institutional-grade insights through data-driven charts and analysis. Today we’ll cover:
Bitcoin’s rebound above $80K was short-lived. With U.S. technology stocks selling off sharply and investors reducing their exposure to risk, Bitcoin is once again under pressure. This latest selloff comes at a particularly vulnerable moment for Bitcoin, with its recovery already struggling to maintain momentum. In case you missed it, here are the other topics we covered this week:
Get these professional-grade insights delivered to your inbox: The Ecoinometrics DecisionBitcoin ETF Flows Have Shifted to Strong OutflowsShould we be surprised that Bitcoin’s rebound above $80K didn’t hold? Not really. Thursday’s selloff started on Wall Street, where the Nasdaq plunged 5.5%, led by AI stocks. The Democrats’ victory in the midterm elections has raised concerns that tighter regulations could slow the expansion of AI infrastructure, adding to existing worries about the returns on all that investment. And when investors start reducing their exposure to risk, Bitcoin tends to get caught in the selling. Historically, when the Nasdaq falls more than 1.5% in a day, Bitcoin also declines roughly 75% of the time. But Bitcoin was already vulnerable before Thursday’s selloff. As we pointed out earlier this week, ETF flows had shifted from a neutral regime into strong outflows. Over the last five trading sessions, US spot Bitcoin ETFs have recorded approximately $1.5 billion in net outflows. Historically, this strong-outflow regime has been associated with a higher probability of negative daily returns for Bitcoin. And that’s the concern. Even when the immediate pressure from the equity market subsides, Bitcoin will still have to contend with weakening ETF demand. As long as those outflows persist, the market is going to have a hard time sustaining a recovery.
Corporate Bitcoin Buying Rebounds, but Overall Demand WeakensWith ETF investors pulling money out of Bitcoin, can we at least find some comfort in the fact that public companies are buying again? After a very quiet summer, corporate Bitcoin purchases picked up considerably in October. Public companies added roughly 20K BTC to their treasuries, more than enough to compensate for the approximately 6K BTC withdrawn from spot ETFs during the month. But there’s a catch. In September, ETFs and public companies together accumulated roughly 36,000 BTC. In October, that figure dropped to around 14,000 BTC. So even with the recovery in corporate purchases, net accumulation across these two channels fell by about 60%. And there’s another reason why this matters. Historically, ETF flows have had a stronger relationship with Bitcoin’s price changes per BTC than public-company accumulation. That means we can’t simply assume that one BTC purchased by a company provides the same price support as one BTC flowing into an ETF. Corporate buying is helping absorb some of the selling, but it hasn’t restored the demand we had just a month earlier. With ETF outflows accelerating again in November, that leaves Bitcoin in a vulnerable position.
Bitcoin Is Approaching a Critical Test of Its 200-Day AverageThe third warning sign is that Bitcoin is getting uncomfortably close to its 200-day moving average. After losing $80K, Bitcoin is now trading just 7% above that level. And as we’ve seen repeatedly, that’s the kind of distance Bitcoin can cover in just one or two particularly volatile trading sessions. The 200-day moving average is an important reference for Bitcoin’s longer-term trend. We spent much of this year trading below it before finally reclaiming it during the recovery in August. Now that recovery is facing another serious test. A brief move below the average wouldn’t necessarily be decisive. But if Bitcoin breaks below it and fails to recover, we would have to call a complete failure of the recovery. And given the deterioration in ETF demand and the pressure coming from broader financial markets, we think the risk of that happening is high.
That’s it for today. Thanks for reading. Cheers, Nick Invite your friends and earn rewardsIf you enjoy Ecoinometrics, share it with your friends and earn rewards when they subscribe.
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