As the price of Bitcoin plummeted to a three-month low on Tuesday, an investment bank analyst and noted entrepreneur separately warned that more pain lurks ahead.
Geoffrey Kendrick, Standard Chartered’s global head of digital assets research, warned market participants in a research note to avoid buying the dip. He wrote that Bitcoin’s price is making “a move to the low 80s,” while anticipating spot Bitcoin ETF outflows will increase.
Bitcoin changed hands as high as $108,000 last month, according to crypto data provider CoinGecko. But amid President Donald Trump’s renewed trade war, shifting rate cut expectations and wider macroeconomic uncertainty, the asset’s price has dropped below the $87,000 mark, as of this writing.
A meme coin selloff hitting the price of Solana hasn’t helped, Kendrick added.
On Monday, spot Bitcoin ETFs notched $516 million worth of net outflows, according to CoinGlass. As a barometer for financial institutions’ interest in the asset, Kendrick predicted that Bitcoin’s price won’t bottom out until daily net outflows for spot Bitcoin ETFs top at least $1 billion.
That would be the largest daily bleed for spot Bitcoin ETFs on record. When a hawkish Fed toppled Bitcoin’s price from its record high in December, daily net outflows peaked at $672 million.
Hayes’ “goblin town”
Still, not all allocations to spot Bitcoin ETFs are outright bullish bets, as signaled by former BitMEX CEO Arthur Hayes. While he predicted in January that the crypto market will peak in mid-March, he has similarly turned pessimistic about Bitcoin’s price in the short term.
On Tuesday, Hayes said that “goblin town” is rapidly approaching on X (formerly known as Twitter). While the term has become linked to a pandemic-era NFT project, in crypto circles, it’s also synonymous with a bear market.
Hayes posited that many market participants holding BlackRock’s spot Bitcoin ETF (IBIT) are actually hedge funds engaged in a delta-neutral trade.
#Bitcoin goblin town incoming:
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.
If that basis drops as $BTC falls, then these funds will sell $IBIT and buy back CME futures.
These… pic.twitter.com/3PskTxrBPR
— Arthur Hayes (@CryptoHayes) February 24, 2025
By holding BlackRock’s spot Bitcoin ETF, and selling Bitcoin futures, market participants can capture a spread as Bitcoin’s spot price converges with the strike price of a futures contract. The trade is commonly referred to as a basis trade.
“If that basis drops as [Bitcoin] falls, then these funds will sell IBIT and buy back CME futures,” Hayes said, adding that Bitcoin’s price will hit $70,000 as the trades are unwound and they sell BlackRock’s spot Bitcoin ETF.
If that prediction proves true, then Bitcoin will have shed nearly the entirety of its post-election gains. On the night of President Donald Trump’s White House victory, Bitcoin traded at $69,300.
Amberdata’s Director of Derivatives Greg Magadini told Decrypt on Tuesday that spot Bitcoin ETFs have given market participants new tools to “capture high yields found in the crypto ecosystem” that previously went untapped.
“Historically, crypto has had a high cost of capital paid through perp funding or futures basis as traders were willing to pay up to 30% a year for leverage,” he said, adding the presence of a basis trade in Bitcoin is relatively new.
Among traditional finance institutions, the cost of capital is closer to that of risk-free rates. The 10-year Treasury yield, often used as a proxy, stood around 4.42% on Tuesday.
Magadini said that the basis for Bitcoin futures will likely fall toward that rate as a structural trend established in the crypto market through the start of spot Bitcoin ETFs.
Edited by James Rubin
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Source: https://decrypt.co/307685/bitcoin-plunge-fruther-toward-80k-much-lower
