According to Bloomberg, Bitcoin investors in Asia may be reacting to the impact of automated trading protocols on US ETF flow data, which has experienced significant volatility. Daily demand level data for Bitcoin ETFs is disseminated throughout the entire cryptocurrency market during the Asian trading session after US stock market hours. On Tuesday, digital assets experienced the most severe decline in over a month as fund flow data indicated investor withdrawals.
Bitcoin ETF flow situation between the US and Japan, source: Coinglass. Shiliang Tang, President of proprietary trading firm Arbelos Markets, stated that this flow pattern helps explain why market returns during the Asian session were “particularly strong in February and early March, but not as strong by late March.” As algorithms sell off Bitcoin, this could have a cascading effect on the derivatives market. Coinglass data shows that approximately $354 million worth of long positions in cryptocurrencies were liquidated on Tuesday, marking the highest record in about two weeks.
Charlie Morris, Chief Investment Officer at ByteTree Asset Management, wrote in a report that Bitcoin accounts for around 5.5% of the total ETF holdings, while gold only represents 1%. Therefore, ETF fund flows are more important for Bitcoin compared to gold.
