Bitcoin (BTC) was trading near $84,000 after another failure to surpass its yearly open at $87,700. Bitfinex said the next step would depend more on the recovery of spot demand than on increasing futures leverage.
Bitcoin had reached $87,200 on October 2, before retreating below the key level. The rejection brand the third failed escape in the last ten days. The question now is whether this will reverse the trend.
Leverage decreases as demand slows
Futures activity was behind much of this movement, with open interest increasing by $2.1 billion ahead of the September payroll report, according to Bitfinex. Futures open interest then fell by $1.5 billion as traders closed their positions after the data was released.
Overall futures open interest now stands at around 625,000 BTC, its lowest level since January 1. This drop suggests lower leverage.
At the same time, spot demand also weakened, with US spot Bitcoin ETFs seeing $241.1 million in net inflows between September 28 and October 2. That was about 90% less than the $2.39 billion recorded a week earlier. The nine-day inflow streak also ended on September 30 with an outflow of $148.7 million.
ETF Demand and Key Levels
BlackRock’s IBIT saw $450.2 million in inflows, while Fidelity’s FBTC saw $168 million in outflows. Bitfinex attributed the lower demand in part to the average ETF holder’s cost basis of around $84,320.
At the same time, ETF inflows have averaged about $65 million when Bitcoin is trading less than 2% of that level, compared to $136 million when it is trading more than 10% above that level. Bitfinex sees $86,000 as an important level, while a drop below $82,600 could plunge ETF holders back into losses.
Beyond ETF flows, the $84,000 to $84,500 range contains approximately 867,000 BTC. This is the largest cluster based on cost, with approximately 75% of Bitcoin’s supply in profit. Weak payroll growth has also raised expectations of a rate pause in October, even though inflation, spending and Treasury yields remain high.
Bitfinex expects BTC to consolidate between $84,000 and the yearly open. Larger ETF inflows could support a move towards $90,000. Sustained trading below $81,300 could highlight $77,000 and the real market average near $77,200.
The post Bitcoin Struggles to Rise as ETF Demand Weakens: Bitfinex Alpha appeared first on CryptoPotato.
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