Bitcoin (BTC) ended last week at approximately $55,850, marking an 11% decrease from the previous week’s closing price of around $62,775. Throughout the week, strong selling pressure was evident, with BTC trading as low as $53,500 on Thursday before rebounding to $58,250 and closing at $55,850.
Despite the significant drawdown, BTC Spot ETFs experienced positive inflows last week, with about $238 million in net inflow. The cumulative trading volume since inception is now around $315 billion, showing a decrease in trading activity. This aligns with expectations and typical market behaviour, as Q3 usually has the lowest trading activity. Thus, this data should not be seen negatively but rather as a seasonal trend, especially among traditional finance investors.
Interestingly, the substantial market decline showed no correlation with BTC Spot ETF flows. Historically, BTC Spot ETFs have significantly influenced market activity and price action, with a strong correlation between ETF flows and price movements. However, for the first time since their inception, there is a noticeable decoupling between price action and capital flows, indicating that recent price behaviour has been driven mainly by trading activity within the crypto-native space.
On-chain crypto trading volume remains consistent
Supporting this observation, despite a decrease in BTC Spot ETF trading volumes compared to previous weeks and months, on-chain crypto trading volume has remained consistent with the year-to-date average. Last week, BTC on-chain daily volume was around $41.1 billion, with a weekly volume of roughly $288 billion. If this level of trading continues through July, the cumulative on-chain trading volume would be about $1.3 trillion, matching June’s volume and approaching May’s $1.4 trillion.
“The high on-chain selling pressure may be attributed to the commencement of Mt.Gox repayments, which have been awaited by investors for years,” said Matteo Greco, a research analyst with Fineqia International in Canada. “Although investors might wait up to 90 days to access the funds, the official news of repayments, confirmed by the verified movement of 47,228 BTC from a Mt.Gox-associated cold wallet to a new address likely designated for repayments, triggered market reactions.”
Additionally, miners’ selling pressure remains high due to the recent halving, which reduced mining rewards by 50%. Although this selling pressure appeared to be decreasing in recent days, it still exceeds demand, contributing to the negative short-term price action.
“The recent drawdown has significantly reduced the extent of unrealised profits, primarily driven by selling pressure from long-term holders.,” Greco added.
The MVRV ratio (market value vs realised value) currently stands at around 1.5, indicating an average unrealised profit of 50% among market participants. This is a steep decline from the value above 3 observed in March, which indicated an average unrealised profit of over 200%. This trend suggests that recent price action was mainly due to long-term holders taking profits and selling their coins to new buyers at higher purchase prices, thereby reducing the average unrealised profit across the network.
