Bitcoin price continued its downtrend on April 17 as the market eagerly awaited the Bitcoin halving event, which is expected to occur on April 20.
Data from Cointelegraph Markets Pro and TravingView showed Bitcoin (BTC) fell from an opening of $63,814 on April 17, dropping as much as 7.5% to an intra-day low of $59,648.
Besides the escalating geopolitical conflict in the Middle East, Bitcoin’s price correction has recently accelerated due to stagnating spot Bitcoin exchange-traded fund (ETF) demand, a strengthening U.S. Dollar Index (DXY) and a weakening technical setup.
Bitcoin ETFs struggle amid “zero flow” days
The April 17 red candle represented a 3% drop over the last 24 hours, with slowing flows into U.S. spot Bitcoin ETFs adding to the sell-side pressure.
Data from Farside Investors shows that the ETFs saw another day of net outflows, totaling $58 million, on April 16. This has been accelerated by $79.4 million and $12.9 million outflows from the Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB), respectively.
The table above reveals that most ETF issuers recorded zero flows over the last few days, leaving market participants with many questions.
Bloomberg ETF analyst James Seyfartt explained the non-existent flows to his followers on X, pointing out that around 83% of all ETFs on the U.S. market saw zero inflows on April 14:
“On any given day, the vast majority of ETFs will have a flow number of ZERO -- this is very normal. There are ~3,500 ETFs in the U.S.. Yesterday 2,903 of them had a flow of exactly zero.”
Seyffart said the flows were no cause for concern and were typical for most ETFs due to how new inflows are recorded.
Seyffart explained that shares of an ETF are created and redeemed only when there is a large enough mismatch in supply and demand and the cost to do so is lower than hedging. In the case of Bitcoin ETFs, these creation units range from 5,000 to 50,000 shares.
He added that “minor mismatches will see the market makers handle trading of shares just like they would a stock.”
DXY records “best 5-day run since February 2023”
The U.S. Dollar Index (DXY), a metric that tracks the dollar’s performance against top world currencies, ro 2.56% from its April 10 low of 103.52 to a six-month high of 106.169 on April 16, recording its best five-day run in 14 months.
The Kobeissi Letter attributed the strengthening dollar to expectations of sustained higher interest rates. Kobeissi Letter said in part of an April 17 post on X that:
“Interest rate cuts have been pushed back to starting in September 2024 with just 2 rate cuts this year.”
Higher interest rates typically encourage foreign investors to take advantage of greater returns on bonds and term deposits, increasing the demand for the dollar.
From a technical perspective, the U.S. Dollar Index looks on track to rise by more than 0.87% toward the November 2023 high at $106.757.
Related: Bitcoin bids stack above $60K as hopes of a BTC price rebound build
Bitcoin’s crucial support at $62,000 flipped into resistance
Considering short-term BTC price action, traders looked for levels of crucial importance for Bitcoin.
Earlier on April 17, independent trader and X user Ali said Bitcoin’s UTXO realized price distribution (URPD) revealed that the $62,000 level was BTC’s “crucial support” level.
“$62,000 is a crucial support zone for #Bitcoin. Losing this level could shift the focus to the next significant demand area around $51,500.”
URPD is an on-chain metric by Glassnode that shows the rate at which a certain set of Bitcoin UTXOs were produced.
Glassnode explains that each bar represents the amount of existing Bitcoin that last moved within a specified price bucket, with the price specified on the x-axis referring to the lower bound of that bucket.
BTC has since lost this support, which has now turned into an area of strong resistance for its bulls.
According to IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model, more than 1.15 million addresses previously bought approximately 630,110 BTC at a $62,858 to $64,670 price range.
The IOMAP chart also showed that Bitcoin faced stiff resistance in its recovery path compared to the support it enjoyed on the downside. This suggested that the path with the least resistance was downward.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.