According to Bloomberg, Bitcoin investors in Asia may be reacting to the impact of automated trading protocols on the flow data of US spot ETFs.
Data on the daily demand levels of Bitcoin spot ETFs is disseminated throughout the cryptocurrency market during the Asian trading session after the US stock market closes. On Tuesday, the digital assets experienced the most severe decline in a month, as indicated by the flow data showing investor withdrawals.
The flow situation of Bitcoin spot ETFs 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 in the Asian session were “particularly strong in February and early March, but not as strong in late March.”
This could have a chain reaction on the derivatives market as algorithmic protocols sell off Bitcoin. Coinglass data shows that on Tuesday, approximately $354 million worth of long positions in cryptocurrencies were liquidated, 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 holdings in the entire ETF space, compared to only 1% for gold. Therefore, the flow of funds in ETFs is more important for Bitcoin than for gold.
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