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Bitcoin ETF Outflows Mount, But Derivatives Traders Stay Bullish
Despite the increasing pressure on the market for spot ETFs market Bitcoin derivative traders haven’t been in a hurry to react. The past week has witnessed an increase in volatility within the cryptocurrency market, while institutions are displaying indications of caution. Bitcoin spot ETFs had six consecutive days of outflows. This highlights an increasing divergence between the traditional financial sentiment as well as the more speculative derivatives market.
Six Days of ETF Outflows and Growing Institutional Caution
This Thursday, Bitcoin spot ETFs incurred $149.66 million net outflows. This was which is a rise of 17% over the $127.12 million taken out on Wednesday. This was the sixth day of net outflows, which indicates the ongoing caution of institutional investors.
Although there was a brief glimpse of an overall market recovery, this steady retraction suggests that more players have decided to limit their risk or to stay at a distance during times of increased risk.
According to SosoValue according to SosoValue, the Grayscale Bitcoin Mini Trust ETF (BTC) was the most notable with an inflow that was $9.87 million, taking the historical net inflows of $1.15 billion. In contrast, Fidelity’s FBTC was the worst hit in terms of an outflow of $74.67 million loss even though it has a strong historic net flow of $11.4 billion so far.
Derivatives Market Sends Bullish Signals
Although ETF outflows are the main focus of news but the derivatives market tells a different tale. In spite of the downturn in markets, however, the general mood of investors in the leveraged and retail markets remains positive.
Bitcoin open interest in futures is down a little, dropping by 7%, up to $51.73 billion. This decline is in conjunction with an increase of 2% in BTC however, it most likely means the traders have closed their positions instead of recklessly selling. This type of pullback could indicate a phase of bottoming or cooling-off time before an eventual rise.
More telling is the positive rates of funding and the ongoing interest in call options – both excellent indicators of bullish sentiment.
At the moment of writing the Bitcoin’s funding rate is at 0.0015 percent, indicating that long-term traders pay short-term traders. This is typically a sign of the bullish trend, and traders are betting on an upward trend. However, the market for options has a distinct preference for puts over calls, confirming the notion that many traders are preparing themselves for the possibility of a rebound.
Institutions and. Retail: An Increasing Distinction
What is the most important takeaway of this week’s events is the growing discordance between both retail and institutional sentiment. The institutional market appears to be slowing down, at minimum in the short term, retail and leveraged traders seem to remain strong, or perhaps expanding their bullish bets.
This divergent perspective is not common in the crypto market, particularly during the transitional phase. Institutions generally react less cautiously to the uncertainty of macroeconomics, but retailers are typically more flexible and risk-averse.
Final Thoughts
The ongoing outflows of Bitcoin ETFs are worth mentioning, especially since they point to broader hesitation from institutions. However, the constant bullish signs from the derivatives market indicate that the cryptocurrency bull market may continue to be far from over.
Like all things, the cryptocurrency world is changing rapidly. If the caution of institutional investors proves to be accurate — or whether traders in the retail and derivatives markets remain bullish will be determined by how markets develop over the weeks ahead.
