Opening bell │ #18 │ 17th June

Report highlights:

1. Bitcoin markets have been trading sideways for four weeks now. A catalyst might be around the corner if an Ether ETF begins trading later this summer.
2. Invesco BTCO investors seem to be more attuned to potential market moves, a trend we’ve previously observed. Last week was no different.
3. Correlations are declining across the board, except with gold, which is striving to hit new all-time highs after making significant strides this year.
4. Perpetual volumes increased by 10% last week, marking the third consecutive week of rising trading volumes.

Cryptocurrency markets

Sideways and up ahead: Potential summertime Ethereum ETF listing catalyst?

Bitcoin has been trading between $60k and $74k for the past four months. Although many consider this extremely volatile, seasoned crypto market participants are likely to be more antsy than scared.

Historically, markets that trade sideways often set up for another run-up in Bitcoin (see chart 1). A similar market movement occurred just before FTX collapsed in 2022. Despite the massive impact of the exchange’s failure, along with other failures that year, it took less than two months for markets to recover and regain bullish sentiment.

BTC/USD: Periods the cryptocurrency traded sideways for over four months

Historical returns during the summer season offer little insight or predictability (see chart 2). However, a significant market driver may be on the horizon.

BTC/USD: July and August price change  |  %

Last week, word circulated that the US Securities and Exchange Commission (SEC) is ready to move forward with the approval for the listing of an Ethereum ETF to begin trading.

This could provide markets with another bullish narrative as we head into the summer season. All boats are likely to be lifted if ETH finds its way onto stock exchanges, as the monthly correlation between Ether and Bitcoin has been 0.99—indicating almost perfect correlation.

Bitcoin ETF AUM & flows 

Invesco BTCO ETF investors seem better dialed into Bitcoin direction.

Although Invesco’s Bitcoin ETF ranks near the bottom in terms of total assets under management (AUM), its investors are once again proving to be ahead of the curve in potential market movements.

In our April report (OB#9), we highlighted how BTCO investors exhibit distinctly different market behavior compared to other ETFs that make headlines due to their large flows. BTCO investors sold at the peak in March, while BlackRock’s IBIT investors saw record inflows on the same day (see charts).

Invesco BTCO flows  |   $mn 

Blackrock IBIT flows  |   $mn 

Last Monday, BTCO experienced the largest outflow for the day (excluding GBTC), marking the start of downward pressures on Bitcoin’s price.

Although the $26.1 million of outflows might seem like a drop in the bucket, for these investors, it represented a massive 8% decrease in total AUM.

It’s difficult to assess market dynamics solely by looking at IBIT, as the asset manager has only seen a single day of outflows since Bitcoin ETFs began trading (see chart).

Net US-based Bitcoin ETF weekly flows   |   $mn 

Despite last week’s total outflows exceeding $580 million, ETFs have still seen over $1.2 billion in net flows for June so far.

Considering last week’s outflows were the second largest since January, Bitcoin’s price is holding up well, showing a similar dip to the one seen at the end of March (see table). Overall, Bitcoin ETFs have seen over $15 billion in net flows, with only 6 out of the 23 weeks of trading experiencing outflows.

BTC price change  on outflows

On-chain metrics 

Whale selling pressures kept at bay, as more big buyers enter market.

Record Bitcoin prices have led to a record volume of transfers from whales holding at least 1,000 BTC. However, after the cryptocurrency reached its first high of the year back in March, whales have been moving less and less Bitcoin onto the markets.

According to on-chain metrics from Glassnode, the number of whales has increased by 13% since Bitcoin ETFs began trading in January. Meanwhile, spot market exchange reserves for Bitcoin are at a six-year low.

Volume whale deposits to exchanges  |   $bn 

30—day rolling correlations

Bitcoin in declining correlations with all markets bar gold.

BTC & S&P 500 30-day rolling correlation

BTC & gold 30-day rolling correlation

BTC & DXY 30-day rolling correlation

BTC & WTI 30-day rolling correlation

Derivatives

Perpetual futures volumes increase for third straight week.

Weekly PERP trading volume  |   $bn 

Economic calendar

Key events this week: Quiet at the macro front, US Juneteenth Wednesday.

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