Key Takeaways
What’s the status of institutional flows?
The outflows have eased considerably and may flip positive if market sentiment improves.
What could be the potential recovery catalyst?
Improved liquidity if the ongoing U.S. government shutdown ends, per analysts.
Bitcoin [BTC] institutional flows waned after the crash on the 10th of October, causing the price to drop to as low as $98.9k this week. Despite the weakness, the monthly inflow was positive at $3.4 billion.
Although November began on a similar streak of outflows, the risk-off sentiment began to ease on the 5th of November.
Apart from BlacRock’s BTC ETF, which saw $375.5 million in Daily Outflows, the rest had zero or positive inflows.
Source: SoSo Value
Unsurprisingly, BTC defended $100K on the 5th of November, signaling renewed bids at the psychological level.
If the trend continues and BlackRock’s investors also shift to a risk-on mode, renewed institutional flows could fuel a sustainable BTC price recovery.
BTC price vs institutional flows
In fact, Eric Balchunas recently highlighted BlackRock’s BTC ETF (IBIT) flows patterns, suggesting that the strong demand could return soon after recent outflows.
“We said bitcoin ETFs would grow via two steps forward and one step back, and right now it is back step time. You can see this pattern in IBIT’s flows.”
He added,
“If anything, we’re due a few steps back given all the steps forward.”
Source: Bloomberg
On the macro front, the liquidity was on the verge of recovery, according to another analyst, Willy Woo. The overall liquidity has declined alongside institutional flows, further suppressing price momentum.
However, a potential surge could lift BTC higher, based on past trends, as illustrated in the chart.
Source: X
In fact, a full swing recovery for dollar liquidity in the market could happen if the U.S. government ends the ongoing shutdown, noted Arthur Hayes, founder of BitMEX.
That being said, the main overhead liquidity pools on the charts were at $105k and $111k. These are leveraged short sellers that could be liquidated during liquidity hunts.
On the lower side, the liquidity zones were at $98k and $100k.
Source: Coin Ank
If liquidity returns as analysts anticipate, the $105K and $111K levels could be cleared quickly.
However, $110K remains a critical resistance point. Whether the end of the U.S. government shutdown can catalyze upward momentum is still uncertain.