Why is it said that the changes in Bitcoin ETF funds are not enough to determine market trends?

Written by: Blockchain Knight

The Bitcoin ETF fund data presents a stark contrast; some clickbait headlines hype the onset of a sell-off, but the core data reveals more of a technical adjustment rather than a long-term exit.

Although the current market is under cyclical pressure, investors have not realized losses of about 100 billion dollars, miners are reducing their computing power, and treasury company stock prices are below the book value of Bitcoin, the ETF market has not shown signs of an apocalypse.

Checkonchain data shows that although 60% of ETF fund inflows occurred during the price increase phase, the assets under management of Bitcoin-denominated ETFs only saw an outflow of 2.5% (approximately 4.5 billion USD), which is relatively small compared to the total fund size.

The key point is that the outflow of these funds coincides with the reduction of open interest in CME futures and IBIT options, confirming that it is a structural closing of basis or volatility trades, rather than a collapse of market confidence.

Last week, the capital flow showed two-way fluctuations, with net flow switching between inflows and outflows, and there were no signs of a continuous multi-day decline or a bank run. Trading volume has continued to decline, essentially indicating a position adjustment rather than an exit. During the same period, Bitcoin's price also experienced two-way oscillations, indicating that ETF capital flow is not the dominant factor.

The derivatives market further corroborates this judgment, as the CME futures open interest dropped from $16 billion in early November to $10.94 billion, indicating a continued reduction in risk.

The total open interest in global futures still stands at $59.24 billion, with CME and BN each accounting for $10.9 billion, showing a balanced distribution that reflects the market's reallocation of risk to different venues and instruments, rather than a complete sell-off.

The core focus of the market is concentrated on three major price support levels. $82,000 (the real market average and ETF cost) is the critical point for whether the rebound can continue; $74,500 (Strategy holding cost) tests the narrative tension in the market; if the $70,000 level is lost, it may trigger a full-blown bear market panic.

At the same time, the current market liquidity is uneven, and in a tense environment, it is enough to amplify or mitigate the impact of capital flow.

The key to determining whether the market is shifting from consolidation to capitulation lies in distinguishing between technical outflows and real withdrawals.

The outflow of funds synchronized with the reduction of open contracts is a technical adjustment; if there is a continuous large-scale outflow of funds that weakens asset size, while the open contracts remain stable or increase, it is a signal of new short positions being established and long positions being sold.

Currently, the market appears to be more “shrinking” rather than “collapsing”. Attention should be focused on the changes in hedging positions, the ability to hold key price levels, and the order book's capacity to absorb.