Bitcoin Funds See Weekly Inflows as Analysts Debate ‘Bounce’
Investment funds backed by bitcoin (BTC) and crypto once again saw inflows last week, as BTC extended a now 9-week-long losing streak. At the same time, some analysts are turning positive on the near-term outlook for bitcoin in particular, predicting a “bounce” to the upside in June.
According to data from the crypto research and investment firm CoinShares, regulated crypto-backed funds saw inflows of USD 87m last week, after seeing outflows of USD 141m the week before.
The inflows were by far the largest in funds backed by bitcoin, with USD 69m invested on a net basis over the week. Funds backed by ethereum (ETH), on the other hand, turned out to be the least popular among investors last week, with USD 11.6m flowing out.
The inflows last week pushed the year-to-date inflows to all crypto-backed funds to USD 0.52bn, which CoinShares said is “well below” the USD 5.9bn that was seen at the same time last year.
Still, the fact that year-to-date inflows remain on the positive side is “encouraging” given that BTC has seen negative returns for the year, and indicates that investors “are buying on price weakness,” CoinShares said.
Looking at the performance of the crypto market itself over the past week, before BTC accelerated today, the Singapore-based crypto trading firm QCP Capital said in an update on Sunday that the market is “showing signs of stress.”
It added that there has been a “concerning” divergence in price between crypto and stocks, with the S&P 500 and Nasdaq both trading about 10% higher since May 20, while BTC and ETH have lost ground over time same period.
“This is the type of de-correlation nobody wanted. Bitcoin has yet to test its sub-USD 26,000 May 12 lows. One senses it’s only a matter of time, given bitcoin’s failure to mirror the Nasdaq’s gains in the past week,” Antoni Trenchev, Co-founder and Managing Partner of crypto lender Nexo, told Bloomberg.
Other analysts, however, had a more positive outlook on the market for the near-term.
Among those bullish on bitcoin for June was Benjamin Cowen, an analyst and trader known for his ‘lengthening cycles’ theory for the bitcoin price. In a new video update, Cowen pointed out that the bitcoin chart has now printed 9 consecutive weekly red candles – the most ever for the asset.
This, in itself, is a reason to believe that “a bounce” is likely to occur, Cowen said.
Weekly chart of BTC/USD:
Among the other reasons given by Cowen for why June could be the month we see a relief rally was that the 90-day moving average of the so-called Crypto Fear & Greed Index is at “the lowest it has ever been.”
As a result of the extreme level of fear in the market, a counterreaction could come soon, Cowen argued.
A low reading on Crypto Fear & Greed Index means that there is a lot of fear among market participants, while a high reading means that greed is the dominant sentiment. At the time of writing, the index stood at 10, indicating ‘extreme fear’.
The same sentiment was echoed by Ki Young Ju, CEO of the crypto analytics platform CryptoQuant, who said on Twitter on Monday that bitcoin “is getting close to the cyclic bottom.”
Bitcoin UTXOs (Unspent Transaction Outputs) now take up 62% of Bitcoin’s realized capitalization, the analyst said, adding that “in the 2020 March great selloff, this indicator reached 62% as well.”
Bitcoin’s realized capitalization is the market capitalization of Bitcoin calculated by using the BTC price when each UTXO last moved on the blockchain.
Meanwhile, Zhu Su, the co-founder of crypto hedge fund Three Arrows Capital, hinted today that moves in the stock market could offer a clue to crypto, with stocks of both MicroStrategy and Coinbase up significantly from their lows.
The rebound is “further evidence of American boomer capitulation on crypto mid-May,” the crypto investor wrote.
Further evidence of American boomer capitulation on crypto mid-May— 朱溯 🐂 (@zhusu) May 30, 2022
MSTR and COIN nearly doubling off the lows already, with colossal volumes at the lows pic.twitter.com/KiYyhSJyOG
At the time of writing (14:25 UTC), BTC traded at USD 30,668, up 4% for the past 24 hours and up just over 1% for the past week. At the same time, ETH traded at USD 1,914, up almost 6% for the day, but down almost 7% for the week.
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