Bitcoin's Quiet Week: Institutional Buying Meets Net ETF Outflows

Bitcoin (BTC) experienced a quiet week, with its price sinking below $94,000 on Tuesday, down more than 3% from the previous week. This decline came despite signs of institutional buying, as indicated by 13F filings. For instance, the Abu Dhabi sovereign wealth fund, Mubadala Investment Co., held $437 million of BlackRock’s iShares Bitcoin Trust (IBIT) as of December 31. Additionally, the state of Wisconsin reported having nearly 6.1 million shares of IBIT in Q4, roughly double the 2.9 million shares it held in the prior quarter. Tudor Investment Corp also increased its BTC position, upping its 4.4 million shares of IBIT held in Q3 to 8 million shares (worth $427 million) in Q4.

However, the US spot bitcoin ETFs had $580 million of net outflows last week, breaking a six-week inflow streak. Crypto exchange volumes also reached their lowest level since the US presidential election. Despite these factors, some analysts remain optimistic about BTC's prospects. Mike Marshall, Amberdata’s head of research, noted that liquidity is accumulating around the $95,000 mark, with smart money positioning and retail making small purchases. He attributed BTC's "quiet phase" to investors waiting for clearer economic data and policy resolution.

BTC's recent low-volatility profile mirrors those seen in September/October 2023, as well as those in February, June, and October of 2024. Following each of these periods, "pronounced volatility" followed, with price moving upward three times. Compass Point's Ed Engel and Joe Flynn argued that "crypto prices often rally into the spring before declining into summer," and that BTC's $92,000 cost basis for short-term holders still provides strong support.

As BTC continues to trade well off its all-time high around $109,000, investors and analysts alike are waiting for clearer signals to determine the next move. While institutional buying and low volatility may indicate a potential rally, net outflows from ETFs and low exchange volumes suggest a more cautious approach. As the market awaits more concrete data and policy resolution, BTC's price action remains a topic of interest and debate among investors.