Bitcoin Struggles as ETF Outflows Hit Record Ninth Day, Indicating Decreased Demand

Bitcoin is currently trading around $73,500, marking a decline of approximately 10% from its recent peak of $81,000 earlier this month. This downturn is attributed to a noticeable lack of new buyers in the market, rather than an oversupply from sellers.

In the broader financial landscape, risk assets have seen a rise, largely driven by optimistic news regarding U.S.-Iran negotiations, which has positively influenced oil market sentiments.

Analysts from Bankinter, a Spanish financial institution, noted that expectations of reduced geopolitical tensions and the reopening of the Strait of Hormuz are helping ease pressures on oil prices. However, Bitcoin's struggles seem to be specific to the cryptocurrency sector.

Data from CryptoQuant indicates that long-term investors now hold a record 15.8 million BTC, a figure typically viewed as bullish since it suggests coins are being held rather than sold. Yet, this increase may not reflect strong market confidence but rather a slowdown in trading activity. Since December, there has been a drop of around 2.2 million BTC in the supply held by short-term investors, including 900,000 BTC from Coinbase that has been inactive long enough to be classified as long-term holdings.

Demand for spot Bitcoin ETFs, which have significantly contributed to market gains over the last two years, has seen a decline. According to Glassnode, the inflows and overall demand in the spot market are currently insufficient to sustain prices above the cost-basis threshold of approximately $78,000. Recently, net outflows from ETFs have reached a record nine days in a row, totaling $2.8 billion.

Additionally, Glassnode's realized profit/loss ratio stands at 1.56, which is below levels typically observed during strong bull markets. Traders on Polymarket are predicting a high chance that Bitcoin will conclude May within the $72,000 to $76,000 range. Market participants are advised to remain vigilant.