Bitcoin Futures and Spot ETFs Face Capitulation as BTC Hunts for Bottom

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

Bitcoin (BTC) has been on a downward trajectory over the past three days, with its daily chart registering a bearish three-blind mice pattern. This has taken 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 struggled to establish bullish momentum from the $82,000 range low.

Spot Bitcoin ETFs have witnessed significant outflows in February, with a collective outflow of $2.4 billion this week. On Feb. 25, BTC's largest ETF outflow of $1.13 billion since inception was recorded. Overall, the spot BTC ETF market witnessed an outflow of $3.4 billion in February. This decline in demand for spot BTC ETFs during this week's correction has led crypto analyst Adam to suggest that 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 believes 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 Crypto Fear & Greed Index has 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 suggested that the best course of action is to "wait" and see how the market trends over the coming days.