Market panic sell-off, crypto funds net outflow of $126 million in a week

Original title: "[Bitpush Daily Market Dynamics] Market panic sells off, crypto funds net outflow of $126 million in a week"

Original author: Mary Liu, BitpushNews

Amid geopolitical tensions, the cryptocurrency market fluctuated wildly over the weekend and continued its decline on Monday.

Bitcoin once approached $67,000 in the early hours of the Eastern Time, but bulls subsequently lost momentum and fell to a low of around $62,380. As of press time, Bitcoin was trading at $62,976.73, down 1.4% in 24 hours. Ethereum fell below the $3,100 mark, down 1.42% in 24 hours.

Altcoins fell as BTC momentum stagnated. The vast majority of the top 100 altcoins by market cap fell. In the past 24 hours, Core DAO (CORE) led the gains, up 59.64%, followed by Bitcoin BEP2 (BTCB) with a 28.84% increase, and OKB with a 12.37% increase. Starknet Token (STRK) fell the most, by 8.64%, followed by Bittensor (TAO) with a 8.09% decrease, and Ethena (ENA) with a 7.57% decrease.

The three major U.S. stock indexes also fell generally. As of the close, the S&P, Dow and Nasdaq indexes closed lower, down 0.62%, 0.65% and 1.79% respectively.

ETF flows turn negative, but Hong Kong's approval of spot products could provide a boost

ETF flows enter net negative territory as investors become more hesitant, with $126 million of digital asset investment products outflowing last week, according to CoinShares' weekly digital asset flows report released on April 15. This was the first week of outflows since the record $1 billion outflow in the week of March 22.

Regionally, the United States saw the largest outflows at $145 million, while Canada and Switzerland saw outflows of $6 million and $5.7 million, respectively.

By asset, Bitcoin investment products saw the largest outflows at $110 million, but have maintained positive inflows of $555 million so far this month. "Short Bitcoin products broke a three-week streak of outflows with a small inflow of $1.7 million, likely as investors take advantage of recent price weakness," said James Butterfill, head of research at Coinshares.

Relatively speaking, Ethereum investment products have been hit the hardest, with $29 million outflows from ETH funds last week, marking the fifth consecutive week of outflows.

However, Hong Kong's approval of spot ETF products may boost the market.

According to Caixin, Hong Kong companies under public funds, Bosera International, China Asset Management (Hong Kong), and Harvest International, successively disclosed on April 15, 2024 that the issuance of virtual asset spot ETF products has been approved in principle by the Hong Kong Securities and Futures Commission. After approval, the products issued will include not only Bitcoin, but also Ethereum, which has not yet been approved by the US SEC. Reliable sources revealed that the above-mentioned virtual asset spot ETF products are expected to be listed as early as the end of April. After successful issuance, this will also become the first batch of Bitcoin spot ETFs and Ethereum spot ETFs in Asia.

Bloomberg ETF analyst Eric Balchunas commented that he does not expect much flow in the Hong Kong spot Bitcoin ETF (some analysts estimate $25 billion), and estimates that the inflow may be $500 million for the following reasons: 1. The Hong Kong ETF market is very small, only $50 billion, and mainland Chinese cannot buy it, at least not from official channels. 2. The three approved spot Bitcoin ETF issuers (Bosera, China Asset Management, and Harvest) are small in scale, and no large institutions like BlackRock are involved. 3. The liquidity/efficiency of the underlying ecosystem is low = these ETFs may have large spreads and Prem discounts. 4. Transaction fees may be 1%-2%, which is higher than US spot Bitcoin ETFs.

However, Eric Balchunas emphasized: "All of this is obviously good for Bitcoin because it opens up more investment avenues. I just said it's 'child's play' compared to the United States. In the long run, some of these problems may disappear, with more liquidity, smaller spreads, lower fees and greater issuer participation, but our expectations are more moderate in the short/medium term."

Adjustments will continue

CryptoQuant analysts believe that there is still a high possibility of further adjustments in Bitcoin prices. This is supported by a variety of factors, including a higher average 30-day funding rate, resistance at current historical highs, and market settings that allow "large players to establish large positions."

CryptoQuant analyst Gaa said in the report: "Historically, when retail investors have large-scale profit-taking, it means that a potential top is forming. After the rapid decline in prices in the past two days, these holders have sold off sharply to cash out."

QCP Capital, a Singapore-based digital asset trading firm, said in a note to investors that buying the dip when major geopolitical conflicts break out has historically been a profitable trade.

Ed Goh, head of trading at liquidity provider B2C2, said the firm saw sustained buying of BTC, especially during the weekend dip, with 57% of the platform's funds flowing to the buy side, with the analyst adding that altcoin activity remains high and investors are inclined to buy altcoins.

The overall cryptocurrency market cap is currently $2.32 trillion, with Bitcoin's market cap dominance at 53.66%.

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