CoinShares report shows that last week saw a net inflow of $10 million into Bitcoin ETPs and an increase in outflows for shorting Bitcoin to $4.2 million, indicating improved market sentiment. Additionally, Coinbase’s premium index dropped to -0.19 last week, the lowest level since November 2022, which may suggest an upcoming rebound in Bitcoin prices.
After reaching July, the cryptocurrency market seems to have improved sentiment. The Bitcoin spot ETF had a net outflow for seven consecutive days, but on the 28th, it had a net inflow of $73 million, the highest single-day inflow in two weeks.
According to CoinShares’ statistics on digital asset investment products’ flow data, although there have been three consecutive weeks of net outflows, the total outflow has significantly decreased from the previous two weeks of $598 million and $582 million. In the most recent week, it decreased to a net outflow of $30 million.
CoinShares’ report states that compared to the previous few weeks, most digital asset issuers have seen a small inflow of funds, although this has been offset by a $153 million outflow from Grayscale. In terms of products, diversified assets and Bitcoin ETPs led with net inflows of $18 million and $10 million, respectively. The outflows for shorting Bitcoin increased to a total of $4.2 million last week, indicating a possible change in market sentiment.
A series of altcoins also saw inflows, with the most notable being Solana ($1.6 million) and Litecoin ($1.4 million). However, Ethereum saw its largest outflow since August 2022, totaling $61 million, resulting in a total outflow of $119 million in the past two weeks, making it the worst-performing asset in terms of net flows this year.
In terms of regions, the United States had an inflow of $43 million, while Brazil and Australia had inflows of $7.6 million and $3 million, respectively. Negative sentiment was prevalent in Germany, Hong Kong, Canada, and Switzerland, with outflows of $29 million, $23 million, $14 million, and $13 million, respectively.
In addition to the flow data suggesting a reversal in Bitcoin sentiment, Coinbase’s premium index dropped to nearly -0.19 last Friday, the lowest level since the FTX crash in November 2022.
Furthermore, David Lawant, the Research Director at FalconX, added that the last time Coinbase’s premium index had such a negative value was in the months leading up to the significant surge from October 2021 to March 2022. In other words, the negative values in May and June this year corresponded to the market calmness in August and September last year. This suggests that Lawant speculates that Bitcoin’s price is about to bottom out and may soon rise.
The Coinbase premium index measures the price difference between BTC on Coinbase and other exchanges. This negative data indicates weak demand and selling pressure from US investors, possibly due to concerns that the US government may sell confiscated assets through Coinbase, leading to a discount in BTC prices on Coinbase.
In the past, when the Coinbase premium index reached severe negative values, it was often near the bottom of the price cycle. BTC subsequently experienced significant rebounds in the following months. For example, in early November 2022, the index dropped to a rare low of -0.33, coinciding with the bear market’s low point below $16,000. The price then soared to nearly $25,000 in February, a more than 50% increase.
Lawant emphasized that this highlights the significant impact the US market has on determining Bitcoin’s price formation. He further stated that given the upcoming catalysts centered around the US, such as ETF flow, interest rate expectations, and the US presidential election, he expects this trend to continue.