Bitcoin price posted a rare green candle in the last 24 hours. However, crypto researcher Axel Adler suggests Bitcoin selling pressure could grow if hedge funds with short positions on the Chicago Mercantile Exchange (CME) sell the spot Bitcoin ETFs they purchased to hedge those positions.
Also read: Bitcoin’s June 2024 – How low can BTC go?
According to Adler, hedge funds might sell these ETF shares to lower Bitcoin prices and profit more from their short positions. However, he noted that the current price of the top crypto asset might prove attractive for institutional traders looking to invest in the sector.
Bitcoin experiences significant volatility
Over the past week, Bitcoin has faced significant volatility, dropping to a monthly low of $58,649 on June 24. While the digital asset has since rebounded above $61,000, analysts tied its previous decline to strong bearish sentiments pervading the market. Blockchain intelligence platform Santiment reported that the crypto community had shown extreme negativity toward BTC in the weeks before the drop.
Also read: BTC miners offload $2 billion in Bitcoin, holdings at 14-year low
It added, “This extended level of FUD is rare, as traders continue to capitulate. BTC trader fatigue, combined with whale accumulation, generally leads to bounces that reward the patient.”
During this period, BTC also experienced sell-offs from different cohorts of holders, further fuelling the volatility. Notably, a Bitcoin wallet connected to the German authorities moved more than $400 million in BTC to several exchanges, including Coinbase, Bitstamp, and Kraken.
The selling pressure further worsened after the US-based spot Bitcoin ETFs embarked on a seven-day outflow streak that ended on June 24, resulting in net outflows of $542 million, according to Crypto.com Research & Insights. However, the trend appears to have turned on June 25, with the ETFs drawing inflows of $31 million on June 25.
Stablecoin supply on exchange increases as top holders buy more
Meanwhile, some Bitcoin holders are taking advantage of the recent price decline to accumulate. Blockhain analytical firm IntoTheBlock stated that addresses controlling at least 0.1% of the total BTC supply added 7,130 Bitcoin worth $436 million to their wallets on June 24 alone.
Meanwhile, there are also signs that more traders might be interested in buying the dip, given the recent increase in stablecoin inflow to centralized exchanges. Lucas Outumuro, the head of research at IntoTheBlock, noted that USDC’s supply into these trading platforms rose to a one-year high of $228 million on June 24. Typically, market analysts explain that an increase in stablecoin supply on exchanges is a bullish signal as it indicates investors’ willingness to invest in the industry.