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Bitcoin could experience a potential drop to $70,000 if ETF liquidations continue, according to Arthur Hayes.
Arthur Hayes, the co-founder of BitMEX and Chief Funding Officer at Maelstrom, has warned that Bitcoin’s value could potentially decline to as low as $70,000 due to persistent bearish trends.
This alert follows Bitcoin’s recent drop to a three-month low of $88,273—its lowest point since mid-November, according to data from CryptoSlate.
Reasons BTC value may decrease further
In a February 25 analysis shared on the social media platform X, Hayes noted that institutional investors have redirected their attention towards spot Bitcoin ETFs, such as BlackRock’s IBIT, in search of higher returns.
According to him:
“Many IBIT holders are hedge funds that went long ETF short CME futures 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 capitalize on the difference between ETF prices and futures contracts. This method is typically employed for hedging, risk management, or gaining exposure to an asset class while minimizing downside risk.
However, Hayes cautioned that if this yield basis continues to narrow, these funds might liquidate their positions by selling ETFs and repurchasing CME futures, potentially leading to a price decline for Bitcoin.
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He concluded:
“These funds are in profit, and given the basis is close to UST yields, they may unwind during US hours and realize their profit. $70,000 I see you.”
Bitcoin ETF outflows
This warning coincides with a continuing trend of outflows from US-based spot Bitcoin ETFs. According to CoinShares, these products experienced outflows totaling $560 million last week amid increasing economic uncertainty.
This trend has persisted into the new week, with data from Farside indicating that spot Bitcoin ETFs collectively faced $516.41 million in outflows on February 24. This represents the second-highest single-day outflow recorded this year.
Constancy’s FBTC led the losses, experiencing significant outflows amounting to $246.96 million. BlackRock’s IBIT closely followed, recording $158.59 million in redemptions.
Meanwhile, this capital flight was not confined to these major players, as other investment products also saw considerable outflows.
Grayscale’s GBTC reported a loss of $59.5 million, while Invesco Galaxy’s BTCO experienced $15.02 million in withdrawals. WisdomTree’s BTCW and Bitwise’s BITB recorded outflows of $12.5 million and $10.3 million, respectively.
Additionally, VanEck’s HODL also faced pressure, losing $7.33 million, with Grayscale’s mini Bitcoin Trust losing an additional $6.25 million.
The post Bitcoin faces potential plunge to $70,000 if ETF sell-offs persist – Arthur Hayes appeared first on CryptoSlate.
