Canada’s Objective Bitcoin ETF (BTCC) has halved its bitcoin (BTC) holdings in just one day, suggesting an alarmingly weak buying sentiment among crypto’s most experienced investors.
Objective: Bitcoin ETF to Decrease 51% of AUM
The fund’s holdings fell from $47,818 BTC to 23,307 BTC between June 16 and June 17, the lowest level since October 2021. The 51% drop in BTC holdings is also the biggest daily outflow ever.
Interestingly, another Canadian crypto fund, called the 3iQ CoinShares Bitcoin ETF, saw similar outflows, falling from 23,917 BTC on June 1 to 12,668 BTC on June 17, indicating that the objective is large. BTC withdrawals at scale were not an isolated incident.
More “Forced Selling” of Bitcoin Ahead?
The outflow came at the peak of bitcoin’s brief break below $20,000, a psychological support level that served as a top during the 2017 bull run. Notably, the price of BTC fell to around $17,570 on June 20, only to reclaim $21,000 two days later.
Still, the fund’s giant bitcoin puke left behind evidence of record-high redemption rates by its institutional clients, believing BTC will resume its bear run below $20,000 in 2022.
“I am not sure how they execute the redemption, but this is a lot of physical BTC to sell in a short time frame,” noted Arthur Hayes, former CEO of BitMEX crypto exchange, said:
“Given the poor position of risk mgmt by #cryptocurrency lenders and overly lenient lending terms, expect more pockets of forcible selling of $BTC and $ETH as mrkt finds out who is swimming naked.”
Breaking Below $20K Is Now “Easy”
Bitcoin ETF outflows have been related to declining buying sentiment in riskier assets, led by the Federal Reserve’s over-hawkish stance against rising inflation.
Notably, bitcoin is down more than 70% from its record high of $69,000 in November 2021, largely stricken by the Fed’s benchmark rate hike and systematic and complete unwinding of its $9 trillion balance sheet.
The US central bank on June 15 cut rates by 75 basis points, the highest since 1994. Meanwhile, its “dot plot” shows it aims to raise lending rates to 3.4% by the end of 2022 against the current range of 1.5-1.75%.
This means that higher gains in the year, which, in turn, could further damage risk appetite, limit bitcoin, as well as the stock market’s recovery potential.
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“The biggest issue I see right now is a global recession, which is very close,” said Paweł askarzewski, co-CEO of DeFi launchpad platform Synapse Network.
“Because of this, retail and institutions are very scared and they do not have the firepower of the capital they did a year ago. So it is very easy to break the $20K line because of the shallow market, as there may not be enough capital to withdraw it. Take.”
BTC level to watch
If BTC price falls below $20,000 again, a retest of $17,000-$18,000 as support for Bitcoin is all but guaranteed.
Meanwhile, an ongoing selloff could push BTC down to $14,000 at its May 2019 top. Interestingly, the Volume Profile Visible Range (VSVR) of Bitcoin further suggests that the $8,000-$10,000 range is most prominent depending on trading activity.
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