Crypto Sees 5th Straight Week of Exits Catalyzed by Negative Bitcoin Sentiment –

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Digital asset investment products saw outflows totaling $32 million for the week ending May 19, marking the fifth consecutive week of outflows and bringing total outflows over the past five weeks to $232 million , or 0.7% of total assets under management.

Trading volumes declined, reaching $900 million for the week, around 40% lower than the 2023 average. This drop in volumes reflects the lowest level since late 2020 and coincides with the overall price decline of crypto and sales concerns.

Negative sentiment towards Bitcoin was evident, with outflows of $33 million, while short Bitcoin products saw minor outflows of $1.3 million, bringing the total outflows for short investment products to BTC at $235 million in the last five weeks, in line with the recent trend.

Institutional Confidence Falls as Bitcoin Faces Falling Value and Persistent Outflows

Institutional investors continued to show a lack of confidence in digital assets last week, particularly in the price of Bitcoin, causing its value to drop significantly to $27,307 and leading to another week of outflows from cryptocurrency products. investment in digital assets.

The latest edition of CoinShares”Digital Asset Funds Flow Report”, published on May 22, revealed that crypto funds saw outflows of $32 million between May 15 and May 19, making it the fifth consecutive week of outflows.

CoinShares head of research James Butterfill observed that the negative sentiment was mostly focused on Bitcoin, with a total outflow of $232 million during this period.

During the five-week period from April 21 to May 19, the price of Bitcoin declined by approximately 4.8% to $26,842. At the time of writing, Bitcoin’s price stands at $27,257, according to CoinMarketCap.

A market analyst has suggested that the price of Bitcoin has remained stagnant for the past few weeks as traders wait for a significant market catalyst that could push the price up or down. He pointed to the upcoming decision on interest rate hikes by the Federal Reserve in June as a potential trigger for market movement.

Butterfill further stated that Bitcoin investment products have seen outflows totaling $112 million so far this year, including $100.8 million of that amount in May alone. Short-Bitcoin products also recorded outflows of $34.8 million in May. However, the reasons for the coordinated negative sentiment towards long and short investment products remain unclear.

In terms of outflows by country of exchange, Germany led the way with $24.1 million, followed by US exchanges with $5 million. Interestingly, despite the adoption by the European Union of the Markets in Crypto-Assets (MiCA) regulation on May 16, which should theoretically have a positive impact on the European crypto market, Germany still experienced important outings.

Despite the prevailing negative sentiment, Litecoin and Avalanche have managed to attract inflows into their investment products, deviating from the broader trend in the crypto investment products market. Litecoin received inflows of $0.7 million, while Avalanche saw inflows of $0.3 million. Ethereum, on the other hand, faced outflows of $1 million.

Bitcoin Miners’ Reserves Dwindle as Selling Pressure Increases

A recent report from CryptoQuant highlighted the movements of Bitcoin miners on May 19. The report indicates a decline in Bitcoin miner reserves, suggesting that miners are selling off their holdings and exerting selling pressure on the market.

CryptoQuant Miner Reports

The report contained a chart that showed a significant drop in reserves following Bitcoin’s price peak in mid-April, with another smaller drop occurring later in the month, both coinciding with subsequent price declines.

CryptoQuant noted that the most recent decline in mining stocks occurred this week and coincided with a move to Binance, according to their analysis.

Two transactions of 1,750 BTC have been identified from miners’ wallets to an exchange, with a high probability that they will eventually end up on Binance, according to the analyst’s assessment. The coins were moved from the Poolin Bitcoin miner address, with an approximate value of $47 million based on current prices. Although this is just one miner, similar selling patterns among miners could contribute to downward pressure on the markets.

On May 18, Glassnode, an on-chain analytics firm, reported a decline in Bitcoin mining profitability. They found that on 47.7% of trading days, miner earnings exceeded the daily production cost, indicating that 52.3% of trading days were unprofitable for the average miner.

Based on the hash rate index, the price of hash, which indicates the profitability of mining, saw a notable drop to $0.076 per terahash per second per day. This marks a substantial decrease from the high of $0.127 seen during the memecoin minting frenzy on May 9.

Compared to the corresponding period of the previous year, the hash price decreased by 38%, which led to a decline in the profitability of Bitcoin mining operations.

Additionally, hash rates are currently near peak levels of 373 EH/s (exahashes per second), combined with near-maximum difficulty and high energy prices. These factors contribute to the harsh conditions faced by Bitcoin miners.

In the short term, the expiry of a large number of Bitcoin options could lead to additional selling pressure. BTC prices are already down 2.3% from their intra-week high of $27,500, standing at $26,863 at the time of writing and showing signs of weakening over the weekend. .

Should selling pressure intensify, there is near-term support at $26,300 followed by a higher level at $25,000. However, the longer-term outlook remains optimistic.

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