Bitcoin Drops Under $59K as BTC Demand Wanes, BlackRock’s IBIT Logs Outflows for the Second Time

• Bitcoin experienced a decline, falling below $59,000 with a weekly loss of over 3.5%, amidst signs of reduced demand and net outflows from major ETFs, such as BlackRock's IBIT.
• However, data shows an uptick in U.S. retail investor interest, evidenced by a higher bitcoin price premium on Coinbase and increased inflows from international exchanges to Coinbase.
• Traders anticipate increased volatility post-Labor Day, influenced by upcoming economic reports and political developments.

Continual profit-taking after last week’s rally saw bitcoin (BTC) continue a week-long slide to under $59,000 early Friday, with major exchange-traded funds (ETFs) recording net outflows amid signs of waning demand.

BTC lost just over 1% in the past 24 hours, CoinGecko data shows, bringing weekly losses to over 3.5% and on track to end August at an 8% haircut (with one day to go). Overall bitcoin demand growth remains low and has even turned negative in the last few weeks, as previously reported.

U.S.-listed BTC ETFs recorded $71 million in net outflows on Thursday for the third consecutive day, SoSoValue data shows, in a sign of professional funds leaving the market.

The biggest losers on Thursday were Fidelity’s FBTC at $31 million and Grayscale’s GBTC at $22 million. However, a shock move for traders came as BlackRock’s IBIT - the world’s largest bitcoin fund by assets under management - recorded outflows of $13 million for the second time ever.

As such, exchange data shows a bump in demand from U.S. retail investors as the bitcoin price premium on the Coinbase exchange has increased to its highest level since July, on-chain analytics firm CryptoQuant shared in a Thursday report.

Additionally, bitcoin is flowing again from exchanges outside the U.S. to Coinbase, a signal of higher demand from US investors and a condition historically correlated with higher prices.

Meanwhile, traders expect market volatility to pick up in the coming weeks. BTC has largely traded sideways in the past week despite favorable rate cut signals and endorsements from Republican candidate Donald Trump – which has impacted sentiment for the broader crypto market.

“Crypto had an uneventful week as BTC and ETH hovered around +/- 1.5% compared to last week's levels. ETF inflows remain subdued,” Augustine Fan, head of insights at SOFA, said in a weekly note to clients.

“We expect market action to pick up after US Labour Day and into next week's NFP to kickstart a busy Fall season, and political headlines to start gaining importance, particularly with the latest Harris/Walz announced plans to raise taxes aggressively.”

It’s a view shared by traders at Singapore-based QCP Capital, who said in a Telegram broadcast that they expect price action to remain choppy even as market volatility may continue.

“Risk reversals until Oct are still skewed towards puts in both BTC and ETH, indicating that the market remains cautious about the downside,” QCP said. “In the lead-up to next week’s non-farm payroll report, we expect market volatility to continue its downtrend as the market positions itself for potential rate cuts by the Fed.”

Federal Reserve chair Jerome Powell has confirmed a pivot to lower borrowing costs next month, as previously reported. Such steps have historically buoyed bullish sentiment among traders as cheap access to money spurts growth in riskier sectors.

“With the absence of any catalysts in the near term, we anticipate prices to continue chopping within the range as we move into September,” QCP added.