Bitcoin hits 5-week low
What's the story
Bitcoin, the world's largest cryptocurrency, has hit its lowest level since April 20. The digital asset fell by up to 1.5% to $74,017 in Singapore on Thursday. The decline comes amid fears over the economic outlook and US exchange-traded fund (ETF) outflows. Second-largest token Ether also witnessed a decline of over 2%.
Market influence
Macro factors affecting Bitcoin's price
The ongoing US-Iran war has raised fears of inflation and interest-rate hikes, affecting investor sentiment. Despite stocks hitting record highs on AI optimism, Bitcoin's price has been affected by these macroeconomic factors. Sean McNulty, Asia-Pacific derivatives trading lead at FalconX, said "Bitcoin's weakness looks mostly macro-driven, not crypto-specific." He added that higher US yields and a stronger dollar have tightened financial conditions.
Market dynamics
ETF outflows impact on Bitcoin's price
ETFs have witnessed net outflows of about $1.5 billion in May, further impacting Bitcoin's price. Reports of a large block sale of the iShares Bitcoin Trust—the largest Bitcoin ETF—have also affected market sentiment. Analysts have noted that continued ETF outflows, weak spot participation, and rising macro uncertainty have kept traders defensive despite Bitcoin holding above the key $75,000 support level.
Demand trends
Caution for investors
Vikram Subburaj, CEO of Giottus.com, provided a broader assessment of institutional demand trends. He said "Since ETFs became a major liquidity driver after the January 2024 approvals, weaker flows have reduced the market's ability to sustain stronger recoveries." He advised investors to avoid chasing sharp short-term rebounds while Bitcoin remains below the $78,000-$80,000 recovery zone.