Bitcoin’s Price Correction: A Sign of Things to Come?

As Bitcoin’s price continues to plummet, investors are left wondering what’s behind the sudden downturn. According to CoinShares, outflows from Bitcoin investment products have reached a staggering $630 million over the last week, with total outflows in 14 days reaching approximately $1.1 billion. This reduction in investment in crypto products is primarily attributed to institutions and long-term investors reducing their exposure to spot Bitcoin ETFs amid the reduced possibility of interest cuts by the United States Federal Reserve in 2024.

Institutions and long-term investors reduce exposure to spot Bitcoin ETFs

The report also highlighted a reduction in weekly trading volumes, reaching $13.6 billion, the lowest volumes traded on ETPs globally since the launch of U.S. spot Bitcoin ETFs in January. Crypto funds now manage $92.2 billion in assets.

Capital flows for crypto investment products

The recent drop in buying and price decreases is mainly driven by the German government’s selling of BTC and market anticipation of Bitcoin repayment from the Mt. Gox trustee.

Accompanying Bitcoin’s price correction over the last week are the continued outflows from spot Bitcoin ETFs. Data from Farside Investors shows that institutions withdrew nearly $544.1 million from spot Bitcoin ETFs between June 17 and June 21. Fidelity’s FBTC saw outflows surge dramatically to $271 million for the week.

Institutions withdraw from spot Bitcoin ETFs

Bitcoin’s price has dropped to $60,000, a level not seen since May 15. The daily relative strength index has dropped from 33 to 28 over the last 24 hours, reinforcing the intensity of the downtrend.

BTC/USD daily chart

Independent trader Jelle wrote in part of his June 24 post on X, “Bitcoin’s daily RSI has not been this low in nearly a year.” He added that BTC is “starting to push for a lower-time frame bounce, with funding in the negatives.”

Fellow trader Dom’s Crypto set out the key levels for Bitcoin moving forward. “If it fails to bounce at $61,300 or to hold above $60,000,” it could drop to the “200-day SMA at $57,200,” he cautioned on the day.

BTC/USD daily chart

Interestingly, data from the monitoring resource CoinGlass showed liquidity of up to $13.28 million, building up at $60,450, close to today’s swing low. Additional data confirmed that $155.22 million of BTC longs have been liquidated over the last 24 hours.

BTC liquidation heatmap

As the crypto market continues to fluctuate, one thing is certain - investors are in for a wild ride. Will Bitcoin bounce back, or will it continue to plummet? Only time will tell.