The continued outflow of institutional capital from large bitcoin ETFs is putting pressure on the world’s largest cryptocurrency as investors switch to more relevant sectors, particularly artificial intelligence, investing.com writes.
Bitcoin fell to a nearly four-month low of $61,442.7. Quotes then partially recovered: by 10:00 Kishinev trading was at $64,097.
Bitcoin under pressure from sustained outflows from ETFs
Bitcoin’s sharp fall occurred against the backdrop of a steady outflow of capital from spot ETFs: institutional investors are also withdrawing from crypto markets.
According to data from SoSoValue, outflows from bitcoin ETFs totaled about $396 million on Wednesday, adding to the roughly $1.02 billion in outflows recorded earlier in the week.
This week’s outflows followed institutional investors cumulatively withdrawing $3.7 billion from bitcoin ETFs over the past three weeks.
The outflows were driven by increased risk avoidance amid macroeconomic turmoil related to the war between the U.S. and Iran.
Strategy, the largest corporate bitcoin holder, also gave bearish signals to the market this week, selling some of its coins for the first time in nearly four years. Despite the small volume of the sale, the move has once again called into question the long-term viability of Strategy’s treasury model, which relies heavily on a steady rise in the first cryptocurrency’s price.
As a result of the recent drop, bitcoin has regressed to levels about 50% below its record high in October.
Outflows from ETFs have also been driven by investors moving out of non-income-generating crypto assets and into AI stocks that offer fundamentals and access to fast-growing technology.
Crypto market today: altcoins continue to fall amid tensions around Iran
The broad crypto market as a whole declined following bitcoin amid a lack of positive signals.
Continued uncertainty surrounding the war between the US and Iran, as well as a lack of clarity in peace talks, is suppressing risk appetite, especially for non-income generating speculative assets.
Capital inflows into the dollar – in anticipation of a protracted war, fueling inflation through rising energy prices – are also putting pressure on crypto markets.
Ether, the world’s second most capitalized cryptocurrency, fell 4.6 percent to $1,785.40, while XRP fell 4.1 percent to $1.1882.
Solana, Cardano and BNB lost between 5% and 9%.
Among memcoins, Dogecoin fell 4% and $TRUMP fell 7.8%.
