Bitcoin’s price has been on a downward trend, dropping to less than $59,000 recently. This decline has been accompanied by outflows from the U.S. spot Bitcoin exchange-traded fund (ETF) market, with over $100 million leaving the market each trading day last week, totaling $544.1 million in outflows.
Bitfinex, a crypto exchange, reported a steep decline in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) and other platforms. The open interest on the CME alone fell by $220 million in the past week, contributing to an overall drop of more than $450 million in open interest across various platforms. This reduction in open interest is linked to negative funding rates observed on exchanges and the outflows from ETFs.
Analysts at Bitfinex suggest that the decrease in open interest and ETF outflows could indicate that Bitcoin is nearing its bottom. Historically, heavy ETF outflows have been associated with the formation of local price bottoms. When Bitcoin dropped below $70,000 in early June, U.S. spot Bitcoin ETFs experienced seven consecutive days of net outflows, reflecting the impact of significant price movements on investor sentiment.
While there are signs that Bitcoin may be approaching a bottom, market sentiment remains bearish according to Bitfinex analysts. They point to weakness in the lower timeframe range of crypto assets, specifically on one-minute to 15-minute charts.
In conclusion, the recent decline in Bitcoin open interest on the CME and other platforms, coupled with significant outflows from U.S. spot Bitcoin ETFs, suggests that the cryptocurrency market may be experiencing increased price pressure. Investors should monitor these indicators closely as they could provide insight into potential market reversals or stabilization points.