Recent market data reveals a coordinated pressure on Bitcoin, with key indicators from spot Bitcoin ETFs, exchange inflows, and stablecoin balances all pointing towards a withdrawal of liquidity and exposure reduction. Bloomberg ETF analyst Eric Balchunas provided a notable counterpoint, highlighting the resilience of long-term ETF investors despite the market downturn.
Balchunas noted that BlackRock's iShares Bitcoin Trust (IBIT) saw its assets under management briefly peak at $100 billion before falling to around $60 billion amid the price decline. He emphasized that this $60 billion figure remains "extraordinary" for an ETF with roughly 500 days of history, and if maintained for three years, it would retain its title as the fastest ETF to reach that milestone. Crucially, the analyst pointed out that only about 6% of total assets have exited Bitcoin ETFs, meaning 94% of investors have held their positions despite Bitcoin's price dropping approximately 40% and many being in loss. Balchunas interprets this as indicative of strong long-term investor behavior.
Binance founder Changpeng Zhao (CZ) responded to this assessment on social media, expressing surprise at the bullish tone from a Bloomberg analyst, quipping, "I was expecting them to write 'BTC is dead' again."
Contrasting this long-term optimism, flow-based data paints a picture of immediate market stress. Analysis of Bitcoin ETF daily netflows shows two pronounced negative events in late January and early February, representing some of the largest outflows on record. These sizable reductions in ETF exposure coincided with continued price declines, suggesting the selling contributed to downside pressure.
Simultaneously, the 7-day simple moving average for BTC UTXO exchange inflows has risen significantly into early February, with larger wallet holders contributing meaningfully to the increase. This trend typically indicates supply is being moved to exchanges for potential sale. Compounding this, USDC balances on Binance have steadily declined since mid-January, showing stablecoin liquidity is being withdrawn from the platform rather than held for deployment, reducing readily available buying power.
The alignment of these three factors—repeated ETF outflows, rising exchange inflows, and declining stablecoin balances—creates a market environment defined by distribution and liquidity tightening. Analysts conclude that until these dynamics shift, the market remains focused on managing downside risk rather than forming a base for a durable recovery.
