Key Points
- Bitcoin’s price drops below $94K, leading to a negative Coinbase Premium Index.
- Despite a decrease in ETF demand, institutional adoption of Bitcoin ETFs continues to grow.
Bitcoin, the world’s top digital asset, is experiencing a downturn as its price fell under the $100,000 benchmark. Data from analytics platform CryptoQuant reveals a sharp drop in the Coinbase Premium Index (CPI) coinciding with the opening of the US stock market on Tuesday.
The CPI index tracks the price difference between Bitcoin on Coinbase and other exchanges. When the premium is negative, it suggests that US retail investors are selling, leading to a downward pressure on Bitcoin’s price.
Bitcoin ETF Outflows and Institutional Adoption
Data indicates that Bitcoin ETF products experienced a total withdrawal of $651.83 million between February 10 and February 14. This suggests that short-term traders are cashing in their profits, leading to a decrease in ETF demand.
The decrease in ETF inflows may also indicate that investors are hesitant to invest more as Bitcoin struggles to surpass key resistance levels.
This downturn follows a strong start to the year for US Bitcoin ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Investments’s FBTC led the ETF inflows. However, the competitive landscape is growing as more investors are exploring other funds.
The recent dip in the Coinbase Premium came after the index fell to a low of 0.0254% a few days ago due to investor uncertainty.
Despite significant sell-offs, institutional investors’ adoption of Bitcoin ETFs has been increasing, according to recent 13F filings with the US SEC. Institutional investments tripled in the last quarter of the previous year, reaching a whopping $38 billion.
ETF expert Eric Balchunas predicts that institutions could eventually hold 40% of total Bitcoin ETF assets. Investment firms continue to increase their Bitcoin exposure, reflecting long-term confidence in Bitcoin.
Bitcoin’s Struggle Below $100,000
Market data shows that Bitcoin is currently trading at $94,172 after falling to a low of $93,434 earlier today. The key $100,000 mark has been a challenge to reach, and factors such as interest rates and regulatory trends are speculated to influence Bitcoin’s future direction.
The low demand from large investors makes it less likely for Bitcoin to recover from below $95,500, increasing the possibility of Bitcoin falling further.
However, some believe that Bitcoin’s price will eventually align with the bullish sentiment of gold, driven by institutional investors and mainstream adoption of Bitcoin by nation-states.
It’s important to note that if short-term traders continue to cash out and ETF outflows persist, Bitcoin could experience further decline before stabilizing. Nonetheless, acquisitions from firms like Strategy could help Bitcoin regain momentum in the coming weeks.
Investors are monitoring market movement and macroeconomic trends to see how Bitcoin will respond.
