Since February 10, Bitcoin (BTC) has experienced net outflows totaling $651 million from US spot exchange-traded funds (ETFs), which has raised alarm among traders about a potential fall below the $95,000 support level observed over the past month. If this trend persists for another week, the market for spot Bitcoin ETFs could potentially contract by around $1.65 billion.
In spite of these outflows, Bitcoin successfully climbed above $98,000 on February 14, indicating that bullish momentum may not exclusively depend on institutional investors. However, it remains uncertain if those movements were hedged, meaning some entities may have simultaneously acquired Bitcoin futures to mitigate the market repercussions of ETF sales.
To offset ETF outflows, numerous companies, such as Strategy (previously MicroStrategy), Metaplanet, and KULR Technology, have bolstered their Bitcoin reserves. Even established financial institutions like Italy’s Intesa Sanpaolo have recently integrated Bitcoin into their portfolios. Moreover, the supply held by wallets with less than 1 BTC has been progressively increasing.
Bitcoin supply held by addresses with 0.1 to 1 BTC. Source: Glassnode
Wallets linked to retail investors—those holding between 0.1 and 1 BTC—added over $80 million in Bitcoin from February 3 to February 13, reversing a two-week decline. This trend further corroborates the idea that buying pressure isn’t solely driven by institutional actors.
A potential rally above $105,000 might be influenced by smaller retail traders, who, contrary to expectations, have yet to show substantial optimism. Wallets containing less than 0.1 BTC have been net sellers since January 31, according to Glassnode data, and Google searches for the term “Bitcoin” have significantly decreased over the last three months.
Google search trends for ‘Bitcoin’ term. Source: Google
Search interest for Bitcoin on Google peaked in mid-November 2024, coinciding with a price increase of 38% within ten days. Nevertheless, Bitcoin continued rising by an additional $16,000 after that timeframe, hitting an all-time peak of $109,340 on January 20, but retail interest did not see a corresponding uptick based on this metric.
Weak US economic growth could drive capital toward Bitcoin
Investor confidence has been enhanced by robust corporate earnings, with the S&P 500 index trading within 0.5% of its historical peak. Notable cases include Exxon’s 10% year-over-year earnings growth, JPMorgan’s 12% profit increase, and UnitedHealth’s 15% rise in quarterly earnings.
It’s crucial to note that even a modest 2% rise in the S&P 500 can result in a $1 trillion increment in market capitalization. Consequently, a slight shift of capital from equities to Bitcoin could elevate the cryptocurrency’s price beyond $105,000. Moreover, worries about corporate profits are escalating due to the ongoing global tariff war, enhancing the appeal of uncorrelated assets like Bitcoin.
In January, US retail sales dipped by 0.9% compared to the previous month, marking the steepest decline in over a year, as reported on February 14. Jefferies’ US economist Thomas Simons indicated to clients that if similar data persists, first quarter US GDP could potentially turn negative, according to Yahoo Finance.
Related: Crypto bills stack up across the US, from Bitcoin reserves to task forces
Bitcoin’s potential upside has also been limited by investor dissatisfaction with the proposed US strategic Bitcoin reserves, originally endorsed by President Donald Trump, which remain unrealized. In a similar vein, various state-level legislative proposals have emphasized digital asset regulation rather than actively promoting Bitcoin reserves, leading to uncertainty about government-led Bitcoin adoption.
In conclusion, the ongoing ETF outflows should be interpreted as a positive sign, given Bitcoin’s ability to maintain levels above $95,000 despite selling pressure. Additionally, deteriorating macroeconomic factors and increasing uncertainties in traditional markets might compel investors to explore alternative assets, including Bitcoin.
This article serves general informational purposes and is not intended to be, and should not be construed as, legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views or opinions of Cointelegraph.
