Bitcoin futures and spot ETF traders capitulate as BTC looks for a bottom

Bitcoin’s (BTC) daily chart registered a bearish three-blind mice pattern over the past three days, taking BTC’s value outside the long-term established range between $110,000 and $90,000.

Over the past 24 hours, Bitcoin tested the fair value gap, but BTC has struggled to establish bullish momentum from the $82,000 range low.

Spot Bitcoin ETFs bleed $3.4 billion in February

Between Feb. 24 and Feb. 27, Bitcoin registered a significant drawdown of 12.48%, which was accompanied by an extensive period of spot BTC ETF outflows. Data from SoSoValue pointed out that the collective spot ETFs market registered an outflow of $2.4 billion this week, with Feb. 25 recording BTC’s largest ETF outflow of $1.13 billion since inception.

Overall, the spot BTC ETF market witnessed an outflow of $3.4 billion in February.

Demand for the spot BTC ETF declined during this week’s correction, and crypto analyst Adam suggested historical data points to price reversals whenever large ETF inflows or outflows have occurred.

Adam pointed out that in 14 instances of significant inflows or outflows, Bitcoin price has aligned with the direction of those flows only once. This rare occurrence occurred on Nov. 7, following Trump’s victory, when a price surge and substantial inflows were observed.

Adam said,

“Generally, people see a big red number and start panic selling, or vice versa, which ends up sending the market in the opposite direction.”

Likewise, the trader believed that dependent upon other confluent factors, “some relief rally” should be around the corner. However, Zaheer, an anonymous market analyst, said that the current drop in spot prices and ETF net flows was potentially due to the CME futures basis falling below 5%.

The analyst explained that most market participants unwound their positions once the risk-free rate range is broken. The gradual drop in CME futures open interest highlighted low investor confidence, which was further evidenced by low futures premiums.

Related: Key metric shows Bitcoin hasn’t peaked, has bullish year ahead: Analyst

Bitcoin Fear & Greed Index conveys investor

Cointelegraph reported that the Crypto Fear & Greed Index had reached its lowest level since 2022, projecting a score of 10 into “extreme fear.” According to Ben Simpson, the founder of Collective Shift, the current conditions could present a buying opportunity, as the simple strategy of buying into extreme fear and selling into greed has been a profitable move.

However, Axel Adler Jr, an onchain market researcher, pointed out that the Bitcoin Fear & Greed Index’s 30-day moving average is yet to drop below the 50th percentile.

Adler explained that the 30DMA dropping below the 50th percentile has historically signaled Bitcoin price reversals and upward trends, but the current index remains above this level. Adler suggested that the best course of action is to “wait” and see how the market trends over the coming days.

Related: BlackRock Bitcoin fund sheds $420M as ETF losing streak hits day 7

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.