8 days ago 1 min read

Bitcoin Fund Outflows Hit 17-Month Low, Is Bullish Run Imminent?

bitcoin-silicon valley bank-charlie morris-markus thielen-stablecoin

Around 16,560 BTC ($409 million) have been removed from Bitcoin funds this month, bringing the total to a 17-month low of 826,113 BTC.

Closed-ended funds, spot and futures-focused exchange-traded funds (ETFs) in Europe, the United States, and Canada are mostly to blame for this reduction. ETFs are frequently used as a proxy for institutional action, and this reduction in fund balance points to a lack of institutional involvement in the recent increase in bitcoin prices, which has been fueled by safe-haven demand and renewed expectations for Federal Reserve rate cuts later this year.

But, the gains might point to bitcoin's growing attractiveness as a safeguard against the banking system. Late last Friday, after Silicon Valley Bank, one of the top 20 lenders in the U.S., ceased operations, bitcoin saw a spike in demand near $19,600. Prices have increased by more than 25% since then, reaching a nine-month high of $26,500 on Tuesday.

ByteTree Asset Management's Charlie Morris, the chief investment officer, told CoinDesk that "institutions aren't buying the narrative that BTC is serious and here to stay," and that both bitcoin and gold are underrepresented in the wealth management sector globally. Morris cautioned against drawing conclusions from the statistics, stating that the only factor bringing the total down is a sizable outflow from a single fund.

Markus Thielen, head of research and strategy at Matrixport, added that other sources of demand are pushing prices higher and that the amount held in funds represents a minor percentage of the overall market. He pointed out that the fund holdings data is meaningless and speculated that USDC investors may be exchanging their stablecoin for bitcoin (BTC). In a recent announcement, Binance stated that it is converting $1 billion in BUSD funds to bitcoin, BNB, and ether.

While institutional investors continue to evaluate bitcoin's potential as a safe-haven asset, the fall in the balance held in funds does not necessarily imply that the price increase lacks strength and is unsustainable. Rather, it emphasizes the significance of monitoring the market's changes.

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