Bitcoin – A look at Wall Street’s behaviour after BTC’s fall below $70K

The cryptocurrency market is facing a strange contradiction right now.

On one hand, retail investors are growing more pessimistic after Bitcoin [BTC] fell below the important $70,000-level, shaking confidence and increasing fear across the market. On the other hand, large institutional investors are telling a very different story.

However, despite the weak price and money continuing to flow out of crypto funds, something unexpected happened on 06 February.

Bitcoin ETF analysis

U.S Spot Bitcoin ETFs, which had seen steady outflows for weeks with few exceptions here and there, suddenly recorded $330.7 million in net inflows. This sharp turnaround was led mainly by BlackRock’s IBIT.

This suggested that while many small investors may be in sell mode, big financial players might be doing the opposite.

In fact, the latter appear to see Bitcoin below $70,000 not as a major breakdown, but as a good opportunity to buy.

A February ‘fever’

Here, it’s worth looking at the first week of February just to assess how unsure institutional investors have been.

In fact, according to data from Farside Investors, the month started on a positive note.

Starting on 02 February, Bitcoin ETFs received $561.8 million in inflows, but that optimism didn’t last long.

Over the next three days, from 03 to 05 February, investors pulled out massive amounts of money totalling $5.16 billion in outflows. Most of this came from a huge sell-off on 05 February, when $4.34 billion was withdrawn in a single day.

However, on 06 February, the trend changed again. And yet, Bitcoin’s price remained in the bear zone, despite some volatility here and there. At the time of writing, the cryptocurrency was valued at $69,140 after a fall of just under 2% in 24 hours. 

Winners and losers of the Bitcoin ETF

A deeper analysis of Bitcoin ETFs’ stats revealed that on 06 February, BlackRock’s IBIT led this move, bringing in $231.6 million.

Meanwhile, other ETFs also saw strong inflows. Ark Invest (ARKB) recorded inflows of $43.3 million, followed by Bitwise (BITB) with $28.7 million. Additionally, Grayscale (BTC) recorded $20.1 million and Invesco (BTCO) recorded $7 million in inflows. 

This spree of buying activity appeared to be very different from how most retail investors might be feeling. Especially since the Crypto Fear and Greed Index dropped to 8 or “Extreme Fear.” This suggested that small traders might be worried and in a rush to sell. 

At the same time, Bitcoin’s market dominance is still high, with a reading of 58.96% at press time. This suggested that money may be moving out of risky altcoins and into Bitcoin. 

Is BlackRock’s IBIT playing a different game?

Recent market chaos also revealed that Bitcoin may have entered a more complex phase. In fact, experts like Arthur Hayes believe the sell-off was mainly mechanical, driven by automated systems and institutional rules, not panic.

Banks like Morgan Stanley are using structured products linked to BlackRock’s IBIT and constantly adjusting their positions to manage risk too.

This was clear on 05 February when IBIT trading hit a record $10.7 billion. Options volume reached $900 million too – A sign that institutions may be rushing to rebalance.

Now, whether Bitcoin rebounds from $69,140 or falls further remains uncertain. However, growing institutional influence is clearly changing how the market works.

Final Thoughts

• Sharp outflows between 3 and 5 February highlight how quickly institutional sentiment can change in volatile markets.
• Some capital may be moving out of risky altcoins and into Bitcoin.