- Bitcoin faced another setback in its pursuit of a spot ETF approval.
- BTC may lend itself to sell pressure, but it was experiencing exchange outflows at press time.
Multiple Bitcoin ETF applications in June triggered bullish sentiments in the market. This is because ETFs are a gateway to institutional demand. However, that hope might be short-lived.
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U.S regulator SEC previously shot down past Bitcoin [BTC] ETF applications and the markets reacted negatively. Recent reports suggest that the recent applications might suffer the same fate. The U.S. regulator has reportedly returned documents filed by Fidelity and BlackRock, stating that the documents were insufficient and lacked clarity.
The news of the SEC returning the documents has already had a negative impact on the price in the last 24 hours. Bitcoin fell from over $31,000 to below $30,000 briefly. It has since recovered slightly and exchanged hands at $30,474 at the time of writing.
Source: TradingView
Meanwhile, the MFI indicator shows that Bitcoin is already experiencing some liquidity outflows. The timing is also notable because sell pressure is making a comeback at a previously tested resistance level. But, is this the start of the next wave of sell pressure, or will the bulls regain control?
Bitcoin at risk of losing some of the recently gained liquidity
Bitcoin was already experiencing a slowdown in buying pressure prior to the news about the SEC. However, this new challenge in the pursuit of spot ETFs might erode the prevailing confidence, leading to more potential downside.
Perhaps one of the best ways to look at Bitcoin’s next possible move is to assess its recent flows. Although the recent findings are bearish, exchange flow data shows a contrary outcome. Exchange inflows fell drastically in the last 24 hours and were lower than the level of outflows at press time.
Source: CryptoQuant
A potential reason for these findings is that news of the SEC does not necessarily mean the ETF filings have been rejected. There is still a significant probability that the regulator is stalling and that an appeal might occur sometime down the road.
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On the other hand, investors should still note the market outcome, especially in the derivatives segment. Bitcoin’s open interest pivoted on 27 June and has been on a downward trajectory since then.
Source: CryptoQuant
Similarly, the level of leverage also dropped as the market slid back into a state of uncertainty. The fact that Bitcoin recovered back above $30,000 after the dip is a show of bullish strength. It is further supported by the fact that it is still experiencing more demand than sell pressure.
