This marks the most significant withdrawal since February and extends a concerning streak, bringing total outflows to $3.2 billion over the last three weeks.
Leading these outflows is the market’s leading crypto, Bitcoin (BTC), which experienced a massive $1.4 billion in withdrawals, while the second largest cryptocurrency, Ethereum (ETH), followed closely with $689 million.
The cumulative impact of these outflows, coupled with declining prices, has led to a 27% reduction in total assets under management, now standing at $191 billion, a situation that the Kobeissi Letter has termed a “structural decline.”
Market sentiment remains largely negative, particularly for Bitcoin, with expert Lark Davis examining current trends through the lens of key moving averages.
He questioned whether the current downturn signifies a “big bear,” hinting at skepticism regarding recovery prospects, or a “mini bear,” reminiscent of April’s decline where Bitcoin, despite losing the 200-day EMA, did not breach the 50-week EMA.
The second scenario involves a short-term rally that tests the 50-week EMA, potentially luring investors back before a sharp downturn.
The third scenario, which Davis leans towards, suggests that Bitcoin could reclaim the 50-week EMA by year-end, fueled by easing macroeconomic conditions, including interest rates and market valuations.
Compounding these market concerns is the precarious situation of Strategy, formerly known as MicroStrategy, headed by Bitcoin advocate Michael Saylor.
King fears that forced liquidations could occur again for crypto investors, which could drive Bitcoin prices down toward $10,000 or lower due to increased selling pressure.
King’s commentary reflects a broader skepticism regarding the sustainability of the crypto market’s structure. He criticized the investment strategies surrounding Bitcoin as being propped up by “unsustainable fraud and hopium.”
At the time of writing, Bitcoin was trading at $84,700, over 30% below all-time high levels of $126,000 reached earlier in October.
Featured image from DALL-E, chart from TradingView.com
