Bitcoin is sliding into a high-risk environment due to continued institutional selling, primarily from US spot exchange-traded funds, according to crypto analytics platform Swissblock.
Swissblock said on Tuesday that its Bitcoin risk index was at a high risk score of 33 out of 100, adding that “every time the Risk Index signals that selling pressure is structurally overwhelming the market, what sits underneath is institutional distribution.”
The platform’s proprietary risk index was developed to gauge the overall risk level in the Bitcoin market by measuring the relative balance between selling pressure and buying pressure, helping to assess how “risky” it currently is to buy or hold Bitcoin.
After strong accumulation in March and April, May has flipped back into distribution, and the risk index is now “moving into high-risk territory while ETF flows are deteriorating simultaneously,” said Swissblock.
It added that spot Bitcoin ETF demand is no longer absorbing selling pressure effectively, and without strong ETF support underneath, “the risk index can continue accelerating higher.”
Bitcoin risk index accelerates with increasing ETF outflows. Source: Swissblock
On-chain analytics provider Glassnode reported on Monday that US Bitcoin ETFs have recorded net outflows on nearly every trading day since May 7, showing “a persistent institutional sell signal now running for more than two weeks.”
“This steady drip of outflow continues to add to the supply side without a visible demand offset,” it said.
Jeff Ko, chief analyst at CoinEx, told Cointelegraph on Tuesday that the broader crypto market “remains in a holding pattern.”
“Spot ETF flows have posted more than $2 billion in outflows over the past two weeks, highlighting that institutional risk appetite is still sensitive at the margin,” he added.
Bitcoin dips as US strikes Iran
Risk was accelerated even further on Tuesday morning amid multiple reports that the US had launched fresh strikes on Iran despite the two countries recently making progress on a peace deal.
US Central Command said the strikes targeting Iranian missile sites and boats attempting to place mines were in “self-defense” and were to protect US troops from threats posed by Iranian forces.
Bitcoin reacted with a 1% decline, falling from over $77,000 to just below $76,500 on Coinbase, according to TradingView, but it has remained range-bound for almost four months.
Ko said that “despite Washington’s latest ‘self-defence’ operation, the very short-term market reaction may still lean risk-on, particularly as investors appear to be looking through the geopolitical noise and focusing on the possibility of a US-Iran peace deal.”
