Bitcoin Traders Have Returned to Profit Despite Recent Slowdown in Price Growth and Spot ETF Outflows

Despite experiencing a significant sell-off in Bitcoin's price earlier this week, the cryptocurrency staged an impressive rally to reach $68,000, which has proven to be a critical threshold.

Source: bigpara.hurriyet.com.tr

This surge has not only put short-term traders back into profit but also underscored the resilience and bullish sentiment prevailing in the market. Over the past two weeks, Bitcoin has surged more than 23%, culminating in a peak of $68,583 on July 22, marking its highest level in two months. This upward movement was particularly significant as it exceeded the short-term holder (STH) cost basis, a key metric tracked by analysts at Glassnode. The STH cost basis represents the average acquisition price of Bitcoin for investors holding coins for less than 155 days. Prior to this recent rally, the downturn in early July had pushed over 90% of these short-term holders into a loss, highlighting the financial stress many traders were under.

Glassnode's analysis, detailed in their Week On-chain newsletter released on July 24, pointed out that the breach of the $68,000 mark was a welcome relief for Bitcoin Short-Term Holders. Before this uptick, Bitcoin's price had dipped to lows around $53,500 on July 5, causing significant concerns among short-term traders. However, the subsequent recovery not only brought relief but also pushed the MVRV (Market Value to Realized Value) ratio of all STH cohorts above 1. This ratio is an important indicator in Bitcoin analysis, showing whether the current price is above or below the average cost basis of recent buyers. When the MVRV ratio is above 1, it typically signals profitability for recent investors, which can encourage further capital inflows into the market.

Market analysts, including those at Glassnode, have emphasized that maintaining the MVRV ratio above the STH cost basis is crucial for sustaining a bullish outlook. This metric not only reflects the financial health of recent buyers but also serves as an incentive for new capital to enter the market, potentially driving further price appreciation. Bitcoin's ability to rebound and surpass key resistance levels earlier this week has reinvigorated optimism among traders and investors. The positive on-chain metrics, including the MVRV ratio, indicate that the market remains robust and poised for potential growth in the near term.

Flows Into Spot Bitcoin ETFs Have Reversed Into Negative Territory Recently

On July 23, US-based spot Bitcoin ETFs experienced a significant shift as they recorded outflows totaling $77.92 million, marking an end to a twelve-day streak of inflows. According to data from Value, ETF BIBT led the outflows with $70.3 million, Bitcoin ETF ARKB with $52.3 million, and Grayscale's ETF GBTC with $27.3 million in net outflows. Conversely, BlackRock's ETF IBIT was the sole fund to see inflows, amounting to $71.9 million, while other ETFs did not register any significant flows.

Since their inception on January 11, the 10 spot Bitcoin funds have collectively garnered net inflows of $17.5 billion, amassing over $59.97 billion in assets under management as of July 23. The recent influx into spot Bitcoin ETFs over the past weeks represents the highest since May, when they accumulated total net inflows exceeding $4 billion between May 13 and June 7.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.