Ramazan Eles 
Bitcoin (BTC) has been on a downward trend since its all-time high (ATH) in March and the halving event in April. BTC briefly fell below $60,000 yesterday evening, reaching a new local low of $58,500.
This decline comes as spot Bitcoin ETFs in the US continue to see outflows this week. Bitfinex analysts have evaluated the recent decline in BTC and the heavy outflows from ETFs.
ETF Outflows and Negative Funding Rates Driving Short-Term Selling
Bitfinex analysts attributed the outflows and declines in BTC ETFs to a combination of weak-handed ETF investors reacting to short-term negative news and the easing of basis/funding arbitrage due to negative funding rates.
According to the analysts, one sign of the easing of basis/funding arbitrage is the sharp decline in open positions for Bitcoin futures on the Chicago Mercantile Exchange (CME) and other trading platforms.
“This decline in open positions for Bitcoin futures coincides with the negative funding rates observed across various exchanges in the past week and the ETF outflows. This suggests that funding arbitrage trades linked to ETF flows have largely unwound.”
Has Bitcoin Bottomed Out?
Despite the BTC sales by the German government and the general market, analysts noted that the recent purchase of 11,931 BTC worth $786 million by corporate Bitcoin bull MicroStrategy has provided some balance to the market. They also pointed out that heavy ETF outflows are often associated with the formation of local bottoms.
“The heavy ETF outflows have not directly translated into spot BTC sales,” the analysts said.
“Additionally, historical data shows that ETF outflows typically precede the formation of local bottoms in the BTC price.
This pattern (ETF outflows and price declines) is crucial for investors to watch, as it often provides clues about potential reversals in the market.”
While ETF outflows could signal a bottom for Bitcoin, Bitfinex analysts cautioned investors that market sentiment remains bearish, as BTC and cryptocurrencies are still showing weakness in lower timeframes (1-minute to 15-minute charts).