"Is the Bitcoin rally over?"...ETF outflows reverse, May correction predicted

▲ Bitcoin (BTC)

Fear is gripping the market that the momentum of the bullish rally, which has lasted for several months, could be broken as approximately $500 million flowed out of Bitcoin (BTC) spot ETFs in a single day.

Crypto media outlet Cointelegraph reported on May 1 (local time) that a total net outflow of $490 million occurred in the U.S. Bitcoin spot ETF market. This marked one of the largest daily outflows this year and coincided with the price hitting strong resistance near its all-time high, fueling investor anxiety. As the influx of institutional funds, which had driven the market's rise, sharply reversed into outflows, downward pressure on Bitcoin's price appears to be increasing.

A significant portion of the outflows was analyzed to have come from Fidelity and Grayscale's funds. Notably, even BlackRock's IBIT, which had maintained a solid inflow, saw its inflows significantly slow down or turn into outflows, indicating a cooling market sentiment. Investors are withdrawing funds for profit-taking amidst inflation concerns and expectations of sustained high interest rates, leading to a temporary contraction in the ETF market's liquidity.

Market experts view this large-scale capital outflow as a significant turning point for the Bitcoin rally. Analysts warned that if Bitcoin fails to hold the psychological support level of $70,000, disappointing sell-offs could occur, likely leading to a full-fledged price correction phase. Conversely, some experts maintain an optimistic view, suggesting that this is merely a temporary correction within an uptrend, and inflows will resume once the price stabilizes.

The hawkish stance of the Federal Reserve (Fed) is also cited as a major factor dampening investor sentiment. As expectations for interest rate cuts receded and macroeconomic uncertainty grew, the preference for risk assets diminished, accelerating capital outflows from the ETF market. Institutional investors reducing their Bitcoin allocation and adopting a wait-and-see approach during portfolio restructuring contributed to the market's decline.

The outflow of funds from Bitcoin spot ETFs serves as a key indicator that goes beyond mere figures, allowing for an assessment of market trend changes. The future upward movement of Bitcoin will likely be determined by upcoming economic indicators and the capital flows of major asset management firms. Currently, Bitcoin's price is being tested for its defense above key support levels, and market participants are cautiously observing the timing of institutional capital re-entry.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*