The Potential for Bitcoin Price to Drop to $70,000
Arthur Hayes, the co-founder of BitMEX and Chief Investment Officer at Maelstrom, has raised concerns about the possibility of Bitcoin’s price plummeting to as low as $70,000 due to the prevailing bearish market sentiment.
Recent Bitcoin Price Movement
Bitcoin recently hit a three-month low of $88,273, marking its lowest point since mid-November, according to data from CryptoSlate.
Factors Contributing to a Further Price Decline
In his analysis shared on social media platform X on Feb. 25, Hayes highlighted that institutional investors are now turning their attention to spot Bitcoin ETFs such as BlackRock’s IBIT in pursuit of higher returns.
“Lots of IBIT holders are hedge funds that went long ETF short CME future to earn a yield greater than where they fund, short term US treasuries.”
This approach, known as the long ETF-short futures strategy, enables hedge funds to utilize the basis between ETF prices and futures contracts. While typically used for hedging or risk management, it can also help in gaining exposure to an asset class while minimizing downside potential.
However, Hayes cautioned that a further narrowing of the yield basis could prompt these funds to sell ETFs and buy back CME futures, potentially triggering a price decline for Bitcoin.
“These funds are in profit, and given basis is close to UST yields they will unwind during US hours and realise their profit. $70,000 I see you.”
Bitcoin ETF Outflows and Market Trends
Hayes’ warning aligns with the ongoing trend of outflows from US-based spot Bitcoin ETFs, reflecting a total outflow of $560 million last week as reported by CoinShares.
Subsequently, data from Farside indicated that spot Bitcoin ETFs collectively experienced $516.41 million in outflows on Feb. 24, marking the second-highest single-day outflow this year.
Major players such as Fidelity’s FBTC and BlackRock’s IBIT witnessed significant losses, with other investment products like Grayscale’s GBTC, Invesco Galaxy’s BTCO, WisdomTree’s BTCW, Bitwise’s BITB, VanEck’s HODL, and Grayscale’s mini Bitcoin Trust also facing notable outflows.
