More 'forced selling' ahead? Purpose Bitcoin ETF holdings plunge by 51% in biggest outflow ever
Canada's Purpose Bitcoin ETF (BTCC) witnessed its Bitcoin (BTC) holdings slashed by half in just one day, suggesting an alarmingly waning buying sentiment among the crypto's most-experienced investors.
The fund's holdings dropped from $47,818 BTC to 23,307 BTC between June 16 and 17, its lowest level since October 2021. The 51% drop in BTC holding is also the biggest daily outflow ever.
Interestingly, another Canadian crypto fund, dubbed 3iQ CoinShares Bitcoin ETF, witnessed similar outflows, dropping from 23,917 BTC on June 1 to 12,668 BTC on June 17, suggesting the Purpose's massive BTC withdrawal was not an isolated event.
The outflows came at the cusp of Bitcoin's brief break below $20,000, a psychological support level that served as the top during the 2017 bull run. Notably, BTC's price fell to circa $17,570 on June 20, only to reclaim $21,000 two days later.
Nonetheless, the funds' giant Bitcoin puke left behind evidence of record-high redemption rates by their institutional clients, supposedly invoked by fears that BTC would resume its bear run below $20,000 in 2022.
"I'm not sure how they execute redemptions, but that's a lot of physical BTC to sell in a small time frame," noted Arthur Hayes, the former CEO of BitMEX crypto exchange, adding:
The Bitcoin ETF outflows are related to waning buying sentiment in riskier assets, led by the Federal Reserve's ultra-hawkish stance against rising inflation.
Notably, Bitcoin has fallen by more than 70% from its record high of $69,000 in November 2021, mainly plagued by the Fed's benchmark rate hikes and systematic and complete unwinding of a $9 trillion balance sheet.
The U.S. central bank slashed rates by 75 basis points on June 15, its highest since 1994. Meanwhile, its "dot
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