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Markets

What to know:

The institutional bid under bitcoin is running on fumes.

U.S. exchange-traded funds (ETFs) holding bitcoin have only seen a net increase of 4,500 bitcoins this year, which is surprisingly low. According to data from Swissblock shared on Tuesday, these ETFs were major drivers of the price increase seen in 2023.

I saw a nice, steady climb in Bitcoin through March and April, which helped us bounce back from around $65,000. But May has been a bit of a reversal, and with only a few days left in the month, it doesn’t look like we’ll finish strong.

As a researcher, I’ve been tracking Bitcoin ETF flows, and we saw significant buying in March and April. However, the trend reversed in May, with more investors now selling than buying. Our Risk Index is currently indicating a high-risk environment, and this is happening at the same time that ETF inflows are decreasing. This suggests that current demand from spot ETFs isn’t strong enough to counteract the selling pressure we’re seeing in the market.

This shift is significant because recent increases in Bitcoin’s price relied on demand from exchange-traded funds (ETFs) to offset the selling pressure from miners, long-term investors cashing out, and short-term traders taking profits.

As a researcher, I’ve been looking into market dynamics, and what I’ve found is that when buying interest weakens – when the ‘bid’ gets thin – sellers either need to find a new buyer or lower their price to attract demand. Swissblock proposes that their Risk Index, which essentially gauges how much selling pressure exists versus how much the market can absorb, can continue to rise if ETFs keep distributing – or releasing – assets. Essentially, as long as ETFs are selling, this index could keep climbing.

Bitcoin’s price dipped to $75,808 during Asian trading on Tuesday. Over the past month, its value has fallen by 2.6%, and it’s currently trading near its lowest point in May. While briefly surpassing $82,000 earlier in the month, concerns about economic data and broader market pressures pushed the price back below $80,000. Other cryptocurrencies like Ethereum, XRP, and Solana also saw losses, with Zcash experiencing the biggest drop, falling 9% in a single day.

The Swissblock reading is the latest in a run of on-chain data pointing the same way.

Bitcoin demand seems to be slowing down. As CoinDesk noted yesterday, the rate at which the market is buying bitcoin compared to how much new bitcoin is created has fallen to its lowest point since December.

Over the last two weeks, U.S. spot Bitcoin ETFs have seen $1.74 billion withdrawn, while individual investors have been increasing their use of leverage, betting on a price increase. This pattern – outflows from ETFs combined with leveraged retail trading – has often led to significant and rapid sell-offs when the market unexpectedly moves downward.

What the data does not yet tell traders is whether this is a pause or a turn.

We’ve seen dips in ETF purchases before during this market cycle without causing larger price drops. With global stock markets currently at all-time highs, analyst Alex Kuptsikevich at FXPro points out that bitcoin is likely to experience a ‘golden cross’ – a potentially bullish signal – in the near future, as its short-term and long-term moving averages are expected to converge.

As a researcher, I’ve been closely watching the flow of money into Bitcoin, and it’s clear that the recent surge is largely driven by demand for ETFs. If that ETF demand starts to weaken – if we see them consistently distributing Bitcoin rather than accumulating it – then the fundamental reasons supporting this rally, which began back in April, could start to lose strength. Essentially, the ETF inflows are currently a key pillar of this market, and a shift in that trend would be a significant warning sign.

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2026-05-27 16:27