Can Bitcoin ETF fund flows truly predict market trends? The market truth behind technical adjustments

Amid a wave of aggressive headline hype, many media outlets portrayed Bitcoin ETF emergence as the start of a large-scale sell-off. However, a closer analysis of the data reveals that the current capital movements are not signs of investor confidence collapsing, but rather reflect common phenomena of structural position closing and cyclical adjustments.

The Other Side of Capital Outflows: Technical Adjustments, Not Surrender

Checkonchain’s latest data reveals an interesting contrast. Although 60% of ETF net inflows are concentrated during price uptrends, the actual outflow of Bitcoin-denominated asset management scale is only about 2.5% (approximately $4.5 billion). Relative to the overall fund share, this scale is minimal.

More importantly, the timing of this capital withdrawal aligns perfectly with the reduction of CME futures and IBIT options open interest. This synchronized phenomenon confirms an important inference: current capital flows mainly stem from basis trading position closures and volatility hedging adjustments, rather than widespread market participant capitulation.

Bidirectional Fluctuations in Liquidity Volatility

Last week’s market liquidity exhibited clear bidirectional characteristics. Net capital repeatedly switched between inflows and outflows, without a prolonged multi-day outflow resembling a panic run. During the same period, trading volume continued to decline, which is essentially a reflection of position adjustments rather than large-scale capital withdrawal.

Notably, Bitcoin’s price also showed bidirectional oscillations during this period. If ETF capital flows were the main driver of the trend, outflows should have been accompanied by a unilateral price decline. But in reality, the correlation between price and capital flow is not as strong as expected, further confirming the view of technical adjustments.

Derivatives Market Reveals Risk Reallocation

CME futures open interest shrank from $16 billion in early November to $10.94 billion, indicating a clear improvement in risk indicators. Although the total global futures open interest remains high at $59.24 billion, CME and Binance(BN) each account for about $10.9 billion, with a relatively balanced distribution.

This pattern of risk reallocation suggests the market is not wholesale selling off but rather shifting positions across different venues and instruments. In other words, the market is undergoing structural optimization rather than panic liquidation.

The Market Significance of Three Key Price Supports

The current market focuses on three critical price levels.

$82,000 represents the true market mean and ETF cost center, serving as a critical threshold for the sustainability of recent rebounds.

$74,500 corresponds to the main strategic holding cost, testing the narrative’s tension and resilience.

$70,000—if breached—could trigger a collapse of psychological defenses, leading to widespread bear market panic.

Amplification Effects Under Liquidity Anxiety

Market liquidity is currently polarized. In tense environments, insufficient liquidity can amplify short-term capital flow shocks and may also diminish positive signals. This is an important variable in judging market turning points and requires ongoing monitoring.

Differentiating Technical Outflows from Genuine Withdrawals

The key to determining whether the market is shifting from consolidation to capitulation lies in identifying the nature of capital flows.

Outflows occurring simultaneously with open interest reductions are part of technical adjustments. Conversely, if large-scale continuous capital outflows weaken asset scales while open interest remains stable or even increases, that signals the formation of new shorts and the liquidation of longs.

Current signs indicate the market is in a state of “contraction” rather than “collapse.” Future focus should be on monitoring hedge position changes, key price level holds, and order book absorption capacity. These three dimensions will ultimately determine the market’s direction.