Key takeaways:
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Over $342.2 million in ETF outflows on July 1 and weaker futures activity show traders becoming more defensive.
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Bitcoin traders are watching $106,500 support and significant resistance at $109,000.
Bitcoin (BTC) remains stuck in a $4,000 range as muted market activity and the return of spot BTC ETF outflows suggest that traders are now switching to a more defensive approach.
US Bitcoin ETFs snap 15-day inflow streak
Over $4.7 billion flowed into US-based spot Bitcoin exchange-traded funds (ETFs) between June 9 and June 30, according to data from SoSoValue.
However, investors stopped the inflows by withdrawing $342.2 million on July 1 as the Bitcoin price hovered around $106,000.
The outflows were from four funds, namely Fidelity Wise Origin Bitcoin Fund (FBTC), Grayscale Bitcoin Trust ETF (GBTC), ARK 21Shares Bitcoin ETF (ARKB) and Bitwise Bitcoin ETF (BITB), which saw $172.7 million, $119.5 million, $27 million and $23 million in outflows, respectively.
Related: Bitcoin profit-taking makes $140K key BTC price point: Research
Meanwhile, leveraged ETFs have seen modest activity throughout the week, with back-to-back days of minor outflows since June 26. Lately, no material flows have been seen in leveraged instruments, indicative of the low-risk bias among investors.
Together with negative ETF flows, “limited leveraged ETF flows signal low leverage and modest yields,” K33 Research said in their latest Ahead of the Curve report, adding:
“These suggest limited immediate risk of leveraged-driven market squeezes.”
Muted crypto futures activity
Crypto futures market activity remains muted over the past week, with BTC Binance futures annualized premiums dropping to a 21-month low of 3.9% on July 1, Glassnode data shows.
K33 Research also points out that there has been no substantial change in CME’s crypto futures over the past week. Annualized BTC CME futures premiums dropped to an 8-day low of 6.5% on June 30, reflecting reduced institutional interest or confidence in a near-term Bitcoin price surge.
This “reflects traders’ defensive stance” and a “sustained reluctance to take on new long positions, which has kept perps trading below spot,” K33 Research explained.
Bitcoin’s open interest has also declined by 35,560 BTC over the last week to around 650,000 BTC at the time of writing and remains well below May’s highs of 733,330 BTC, according to data from CoinGlass.
Singapore-based trading firm QCP Capital explained that although the option markets have shown a modest uptick in BTC risk reversals over the last 24 hours, implied volatility remains near all-time lows.
In a July 2 Telegram note to investors, the firm said:
“Basis and yields continue to reflect soft native sentiment, with most positioning now favouring accumulation and range-bound activity.”
Traders await Bitcoin price breakout
Many Bitcoin traders are increasingly cautious as BTC continues to tease and retrace, hovering between $105,000 and $108,800 since June 25.
Popular Bitcoin analyst AlphaBTC said he had his eyes on key levels within this range to see what move BTC makes next.
“All eyes are on $106,500,” the analyst said in a July 2 post on X, explaining that if the price reclaims this level, it could see a “bigger bounce.”
An accompanying chart shows significant resistance above $109,000, which, if breached, could push Bitcoin into price discovery.
“A break and a four-hour close above $109K and ATHs are on the cards.”
AlphaBTC, however, warned that if Bitcoin drops below the lower limit of the range and loses $104,000 with momentum, it could see a deeper correction to sub-$100,000 levels.
“BTC’s current consolidation is typical of a “new month and quarter, where we often see a choppy start after which the price chooses a direction later on,” fellow analyst Daan Crypto Trades asserted, adding:
“Give it some time to play out and watch for confirmations.”
As Cointelegraph reported, BTC could be consolidating within the current range for a few more days, with fresh demand needed to spark upward momentum.
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.