Bitcoin Now Influenced by ‘Not Smart Money’, Bitfinex Warns

It is said that exchange-traded funds (ETFs) are mostly accessed by “smart money” (smart money), that is, experienced and institutional investors. However, this may not be what has happened in the last week in the bitcoin (BTC) market, according to cryptocurrency exchange Bitfinex.

After 19 consecutive days of capital inflows, 580 million dollars (USD) were withdrawn from bitcoin ETFs in the United States last week. “It was a tumultuous week,” Bitfinex considered in a recent report.

“While ETF investment flows are a metric worth watching to gauge investor sentiment around BTC, such flows might not necessarily align with ‘smart money’ flows,” the exchange commented.

It is worth clarifying that «smart money» is a term commonly used in the financial field to refer to capital invested by people who are considered to have extensive knowledge and relevant experience in the market. Often this term associates with investors who are presumed to have inside information or a deep understanding of the market.

Bitfinex specifies that these money flows linked to bitcoin ETFs correspond to investors who are more reactionary to price changes than to predicting the direction of the market. Therefore, understand that price fluctuations generate changes in your trading, rather than vice versa as is believed. You can see this below.

Emphasizes that, every time the price of bitcoin exceeded USD 70,000, ETFs recorded nearly USD 1 billion inflows per day. On the other hand, last week, outflows of such instruments skyrocketed as the price fell to USD 65,000 influenced by the spot market.

“The metrics on-chain show that most of the sales seemed to come, not from ETF investors, but from long-term users, whales and miners,” the exchange said. As anticipated by CriptoNoticias, it maintains that this scenario took place after the United States Federal Reserve (Fed) kept rates unchanged.

For a year now, interest rates in the economic powerhouse have been 5.5%, the highest figure in two decades. The Fed indicated, in its latest decision, that it plans to cut them this year if inflation continues to fall. Although, according to Bitfinex, it is possible that the organization will make further reductions due to indicators that suggest optimism.

Optimistic signs are seen for the bitcoin market

Both the consumer price index (CPI) and the producer price index (PPI) show signs of moderation in the country month after month, while the labor market cools. For the exchange, these factors They make a rate cut possible in September and another in Decemberwhich can motivate markets.

Meanwhile, consider that the imminent launch of Ethereum ETFs in the United States seems to increase positive expectations in this market. Ether (ETH) whales increased their purchases last week.

“Approval could encourage fund managers to apply for other classes of cryptoassets to trade as an ETF,” Bitfinex noted. In this sense, the progress towards the launch of these ETH instruments, which could debut on July 2 according to analysts, can be a catalyst for the markets.