Bitcoin ETF played a crucial part in BTC price latest rally in the last 2 weeks and their involvement in the crypto market has overtime become an important yardstick for measuring demand intensity.
It therefore makes sense to keep track of Bitcoin ETF flows to identify their alignment with market sentiment. Interestingly, the latest data revealed that ETF inflows have been cooling down.
Bitcoin ETF inflows were worth about $197 million on Thursday. This was notably lower than the level of inflows observed earlier in the week, or even compared to last week.
For context, daily ETF inflows surged over $1 billion on Friday last week, which underscored aggressive demand.
This confirmed that demand was cooling down, which was also in line with the latest Bitcoin price outcomes.
Bitcoin ETF Flows Reflect State of Demand, Aligning LTH Activity
Outflows from some Bitcoin ETFs confirmed a shift in market outcomes. For example, Grayscale, Ark Invest and Fidelity collectively sold $64 million worth of BTC.
This effectively lowered Bitcoin inflows to the lowest levels observed in the first 10 days of October.
Weakening institutional demand reflected the recent Bitcoin price action, highlighting weakening demand. However, this was not the only sign pointing towards such an outcome.
Recent CryptoQuant data also disclosed a spike in long term holder outflows. The Long-term holder 30-day net position change maintained its position in negative territory accompanied by declining supply.
The above observation also coincided with a spike in long term holder exchange inflows.
This confirmed that LTHs were securing some profits, an expected outcome especially as price pushed into new highs.
It was however worth noting that LTH outflows remained limited. This confirmed that they still expected prices to continue rallying in the coming weeks or months.
The limited Bitcoin ETF and long term outflows also reflected similar data points from other key metrics.
Bitcoin Exchange Reserves Maintain Downward Trajectory
The latest Bitcoin rally also led to a downward pivot in its exchange reserves. The cryptocurrency had previously experienced a surge in exchange reserves since July.
However, this latest downward trajectory did not push to lows observed in Q3 even though price pushed to new ATHs.
One of the possibly reasons why reserves did not push lower was likely because crypto holders tend to move funds onto exchanges in anticipation of possible downsides.
Especially when prices experience significant upside, which incentivizes profit-taking.
The fact that Bitcoin exchange reserves maintained an overall downward trajectory confirmed that sell pressure was still relatively low.
This suggests that investors anticipated that the bullish trend might still continue.
Bitcoin price still traded within the $121,000 price level, indicating that most holders were not in a rush to sell.
But where does Bitcoin go next? Its price chart highlighted a support and resistance channel going back as far as May.
The latest Bitcoin bullish momentum cooled off after the cryptocurrency achieved a new ATH above $126,000.
However, this level also resulted in a resistance retest, and price has since then pulled back slightly.
BTC price could be headed for more downside possibly below $115,000 if the same support-resistance channel continues to play out.
This means the cryptocurrency may face a bearish capitulation if it fails to hold above $120,000 during the weekend.