Risk-on mood is on, but ETF inflows are slowing down

On Monday, we outlined a neutral trend of a lesser degree, as implied by the daily chart. In addition to that, we observed a formation of the inverted head and shoulders on the 3-hour chart, noting the potential for a small price surge if the neckline was broken to the upside. Interestingly enough, in a broad market risk-on move yesterday, Bitcoin (BTCUSD) rose through the neckline and continued to march above $66,000, where it currently trades. As a result, technical conditions slightly improved on the daily chart and moved toward the bullish side, with RSI and Stochastic resuming growth. Nevertheless, MACD has not yet returned to the bullish zone above the midpoint, and the ADX has not recorded a significant rise, suggesting the trend is still either neutral or very weak if bullish. The major resistance lies at $67,513; if this level is taken out, it will likely open a path to $70,000.

Apart from technicals, major stock market indices recovered nicely from recent selling, being a positive development for Bitcoin, which remains highly correlated with the U.S. tech sector; unless indices start forming a double top, the chances of Bitcoin returning above $70,000 and marking new all-time highs will grow. What is more concerning, though, is that inflows into various Bitcoin-related ETFs saw a significant slowdown this month. For example, Bitwise Bitcoin ETF (BITB) recorded $226.07 million inflows in April 2024. However, so far this month, it saw merely $10.6 million flowing into the coffins. The same is the case for Fidelity Wise Origin Bitcoin Fund (FBTC), whose inflows amounted to $659.42 last month and only $26.19 in the current one. Similarly, iShares Bitcoin Trust (IBIT) experienced inflows of more than $1.6 billion last month but only $23.91 million thus far in May 2024.

Illustration 1.01

The 3-hour Bitcoin (BTCUSD) chart portrays the inverted head and shoulders and bullish breakout through the neckline.

Illustration 1.02

The illustration portrays Bitcoin's (BTCUSD) daily MACD. Its return above the midpoint will bolster a bullish case in the short term. Contrarily, a failure to break through the midpoint will raise slight concerns over an impending loss of momentum, especially if combined with a lack of growth in ADX.

Illustration 1.03

The image above shows simple support/resistance levels derived from past peaks and troughs.

Bitcoin addresses
The number of Bitcoin addresses with balances exceeding 1,000 BTC increased moderately in the past two days, but the rise is insignificant. Besides that, the figure is still lower than a month ago. The same applies to the addresses with holdings exceeding 100 BTC.

Technical conditions
Daily time frame = Neutral
Weekly time frame = Neutral
Monthly time frame = Bullish

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.

Comment:

*Correction of the typo: "The same is the case for Fidelity Wise Origin Bitcoin Fund (FBTC), whose inflows amounted to $659.42 million last month and only $26.19 million in the current one."