Bitcoin (BTC) experienced a continued decline early Friday, dropping below the $59,000 mark as profit-taking from last week’s rally persisted. Major exchange-traded funds (ETFs) reported net outflows, signaling waning demand. According to CoinGecko data, BTC fell just over 1% in the past 24 hours, resulting in a weekly loss of over 3.5%. As the month of August draws to a close, bitcoin is on track for an 8% loss. Recent data indicates that overall demand growth for bitcoin has remained low and has even turned negative in recent weeks.
On Thursday, U.S.-listed BTC ETFs recorded net outflows of $71 million for the third consecutive day, according to SoSoValue data, indicating a retreat by professional funds from the market. Among the hardest hit were Fidelity’s FBTC with $31 million in outflows and Grayscale’s GBTC with $22 million. BlackRock’s IBIT, the world's largest bitcoin fund by assets under management, recorded a $13 million outflow for only the second time in its history, which came as a shock to traders.
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Despite the decline, data from exchanges suggests an uptick in demand from US retail investors. On-chain analytics firm CryptoQuant reported Thursday that the bitcoin price premium on the Coinbase exchange has risen to its highest level since July. Additionally, there has been a noticeable flow of bitcoin from non-U.S. exchanges to Coinbase, historically a signal of heightened demand from U.S. investors and often associated with rising prices.
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Market participants are preparing for increased volatility in the coming weeks. Over the past week, BTC has traded mostly sideways, despite favorable signals for a potential rate cut and political endorsements, including from Republican candidate Donald Trump, which have influenced broader market sentiment. “Crypto had an uneventful week as BTC and ETH hovered around +/- 1.5% compared to last week's levels. ETF inflows remain subdued,” noted Augustine Fan, head of insights at SOFA, in a weekly note to clients. Fan also predicted increased market activity following U.S. Labor Day, suggesting that political developments, such as tax plans from candidates Harris and Walz, could influence market sentiment further.
Traders at Singapore-based QCP Capital echoed this outlook, expecting continued choppy price action alongside potential market volatility. QCP stated in a Telegram broadcast,
“Risk reversals until October are still skewed towards puts in both BTC and ETH, indicating that the market remains cautious about the downside.”
They added that in the lead-up to next week’s non-farm payroll report, they anticipate continued market volatility as the market braces for potential rate cuts by the Federal Reserve.
Federal Reserve Chair Jerome Powell has confirmed a shift towards lower borrowing costs next month, a move that has historically fueled bullish sentiment among traders, as easier access to capital can spur growth in riskier sectors. “With the absence of any catalysts in the near term, we anticipate prices to continue chopping within the range as we move into September,” QCP added.
