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Buyers of the U.S. spot BTC ETFs have an average entry price between $60,000 and $61,000 and a break below the range could bring a wave of liquidations, 10x Research said.
The institutional wave of ETF buying has yet to arrive, wrote Markus Thielen.
Traders often mistakenly cite round numbers as critical support or resistance levels, but in this case, the $60,000 level bitcoin (BTC) is currently flirting with could truly prove important.
“We estimate that the average bitcoin ETF entry price is $60,000 to $61,000, and re-testing this level could result in a wave of liquidations,” Markus Thielen, founder of 10x Research, said.
Since their debut on Jan. 11, the 11 U.S. spot bitcoin ETFs have amassed over $14 billion in net inflows, according to Farside Investors. Per Thielen, 30% of the flows are part of a non-directional arbitrage strategy called the basis trade instead of outright bullish bets.
Bitcoin’s late April break below $60,000 bottomed out at around $56,500 after BlackRock said heavyweight institutions like sovereign wealth funds, pension funds and endowments were likely to trade in the spot ETFs. However, JPMorgan recently revealed that 80% of the inflows into the spot ETFs came from existing crypto market participants.
“When Bitcoin dipped to 56,500 on May 2, Blackrock claimed ‘sovereign wealth and pension funds’ were coming,” Thielen noted. “This helped arrest the decline, but now Blackrock says that 80% of their Bitcoin IBIT ETF buying is from retail, not institutions.”
Bitcoin has dropped nearly 14% in four weeks, predominantly due to faster sales by miners and old wallets, Germany’s divestment of crypto holdings and fears that reimbursement by defunct exchange Mt. Gox will spur a wave of selling.
Bitcoin is lower by 4% over the past 24 hours and trading at $60,200 after earlier Friday morning dipping just below $60,000.
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