Bitcoin (BTC), the world’s foremost cryptocurrency, has experienced a significant downturn following the launch of spot exchange-traded funds (ETFs) in the U.S. last Thursday. Analysis from Paris-based Kaiko reveals that this selling pressure is primarily concentrated on Binance, OKX, and Upbit, leading cryptocurrency exchanges.
Currently, Bitcoin is trading at $42,700 (ZAR 809,592), marking a 12% decline from its peak of $48,975 (ZAR 928,566). This decrease appears to be a result of traders liquidating long positions, which were initially established in anticipation of the ETFs’ debut.
A key metric, the cumulative volume delta (CVD), indicates that traders from Binance spearheaded the “sell-the-fact” retreat in Bitcoin. The CVD measures the net difference between buying and selling volumes over time, reflecting overall market sentiment. A positive CVD suggests higher buying volumes, while negative values indicate selling predominance.
Kaiko’s data highlights a significant capital outflow from Binance’s spot market. Since last Thursday, the CVD has shifted from positive to negative, equating to a withdrawal of nearly 5,000 BTC. South Korea’s Upbit, Itbit, and OKX follow suit in terms of net capital outflow.
The ETFs’ trading debut saw a substantial increase in cumulative volume delta across major exchanges. Binance experienced a net purchase of nearly 3k BTC in the hour coinciding with the U.S. market opening. However, this initial surge was short-lived, with Binance and OKX’s CVD turning negative shortly thereafter.
Itbit, known for its institutional focus but lower trading volumes, demonstrated consistent selling. This trend was mirrored by Upbit, which also showed steady selling without significant retracement.
In contrast, Coinbase and Bitstamp maintained a positive CVD, indicating a net capital inflow despite the overall market’s price weakness.
Some analysts predict that Bitcoin prices may decline further, potentially reaching $40,000 (ZAR 758,400) or lower, before the current pullback loses momentum. The initial performance of the ETFs was underwhelming compared to Bloomberg analysts’ expectations of $4 billion in inflows on the first day. This subdued start further supports the likelihood of a more pronounced price drop.
For South African investors, this global market movement offers critical insights. The dynamic response to the U.S. ETF launch and the significant role of major exchanges like Binance and OKX in market shifts underscore the interconnected nature of global cryptocurrency markets. This scenario serves as a reminder of the volatility and rapid changes inherent in cryptocurrency investments.
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