Weekly Alpha: ETF & Treasury Pressure
What’s Happening
Latest Price Action
Bitcoin has bounced around this week without showing a clear short-term direction. Price has moved both ways, but ultimately BTC is ending the week close to where it started, with only a small gain over the past seven days.
Figure 1: BTC past week price action.
However, when we zoom out beyond the short-term noise, the picture looks more constructive. Over the past month, Bitcoin has been trending higher, with price up around +8.25%. That is a welcome shift after the heavy weakness we saw earlier in the year.
Figure 2: BTC past month price action.
Zooming out further, Philip Swift’s latest analysis continues to show Bitcoin trading in what he describes as the Great DCA area. BTC remains above the 200 week moving average, which has historically been one of the most important long-term support levels in Bitcoin.
Figure 3: Bitcoin Q3 Market Map, showing BTC holding above the 200WMA in the DCA zone.
This does not yet mean market confidence has fully returned. Price still needs to reclaim higher levels, most importantly the 200 day moving average, before stronger bullish momentum can build. But holding above the 200WMA is an encouraging sign and is beginning to bring some mild optimism back to those market participants who have not lost interest in Bitcoin.
ETF and Treasury Capitulation Signs
There are growing signs that the bear market may be close to its lows and that a new bull market could be approaching. Alongside several on-chain indicators, we are also seeing signs of stress in the behaviour of market participants who are under pressure from lower BTC prices.
One area to watch is the ETF market. Bitcoin ETFs have seen repeated outflows over recent months, with the recent cluster of redemptions from BlackRock’s IBIT particularly notable. These outflows accelerated as price briefly dipped below the 200WMA, suggesting that some large holders may have capitulated and exited Bitcoin near historically important bear market levels.
Figure 8: BlackRock IBIT daily flows, showing a recent cluster of outflows as BTC traded around the 200WMA.
We are also seeing stress across the Bitcoin treasury sector. Strategy paused its usual aggressive accumulation in recent weeks, instead building a large cash reserve after selling a small portion of BTC earlier this month. Twenty One Capital has also seen pressure, with Jack Mallers stepping down as CEO and the stock trading near all-time lows. Meanwhile, Satsuma Technology shareholders voted to sell the company’s remaining BTC, wind down the business, and return capital to shareholders.
Figure 9: HODLboard showing the leading public Bitcoin treasury companies.
This type of distress is painful in real time, but it is also typical of late-stage bear markets. When weaker holders, ETF investors, and overextended treasury companies begin throwing in the towel, long-term Bitcoin investors often get the opportunity to accumulate near cycle lows.
In our view, this continues to look like an area of maximum opportunity for patient investors with a long-term mindset.
The Bitcoin Magazine Pro Team
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Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.