Cryptocurrency markets continued to fall on Monday after a weekend of wild swings amid geopolitical tensions.

Bitcoin once approached $67,000 in the early hours of the morning, but bulls subsequently lost momentum and fell to a low of around $62,380. As of press time, Bitcoin is trading at $62,976.73, down 1.4% in 24 hours. Ethereum fell below the $3,100 mark, down 1.42% in 24 hours.

Altcoin fall as BTC momentum stalls. The vast majority of the top 100 Altcoin by market cap are down, with Core DAO (CORE) leading the gains in the past 24 hours, up 59.64%, followed by Bitcoin BEP2 (BTCB) at 28.84%, and OKB at 12.37%. Starknet Token (STRK) has the largest drop of 8.64%, followed by Bittensor (TAO) at 8.09%, and Ethena (ENA) at 7.57%.

The three major U.S. stock indexes also generally fell. As of the close, the S&P, Dow Jones and Nasdaq indexes closed lower, down 0.62%, 0.65% and 1.79% respectively.

ETF flows turn negative, but Hong Kong's approval of spot products could provide a boost

As investors become more hesitant, ETF funds have entered net negative territory, with $126 million of digital asset investment products outflowing last week, according to CoinShares’ weekly digital asset fund flow report released on April 15. This is the first week of outflows since the record $1 billion outflow in the week of March 22.

From a regional perspective, the United States had the largest outflow of US$145 million, while Canada and Switzerland had outflows of US$6 million and US$5.7 million, respectively.

In terms of assets, Bitcoin investment products saw the largest outflows at $110 million, but still maintained positive inflows of $555 million so far this month. "Short Bitcoin products broke a three-week streak of outflows with a small inflow of $1.7 million, likely as investors take advantage of recent price weakness," said James Butterfill, head of research at Coinshares.

Relatively speaking, Ethereum investment products were hit the hardest, with $29 million in ETH funds outflowing last week, marking the fifth consecutive week of outflows.

However, Hong Kong's approval of spot ETF products may bring a boost to the market.

According to Caixin, Hong Kong companies under public offering funds, Bosera International, China Asset Management (Hong Kong), and Harvest International, successively disclosed on April 15, 2024 that the issuance of virtual asset spot ETF products has been approved in principle by the Hong Kong Securities Regulatory Commission. After approval, the issued varieties will include not only Bitcoin, but also Ethereum, which has not yet been approved by the US SEC. Reliable sources revealed that the above-mentioned virtual asset spot ETF products are expected to be listed as early as the end of April. After successful issuance, this will also become the first batch of Bitcoin spot ETFs and Ethereum spot ETFs in Asia.

Bloomberg ETF analyst Eric Balchunas commented that the Hong Kong spot Bitcoin ETF is not expected to have much flow (some analysts estimate $25 billion), and the estimated scale of capital inflow may be $500 million for the following reasons: 1. The Hong Kong ETF market is very small, only $50 billion, and mainland Chinese cannot buy it, at least not from official channels. 2. The three approved spot Bitcoin ETF issuers (Bosera, China Asset Management, and Harvest) are small in scale, and no large institutions like BlackRock are involved. 3. The liquidity/efficiency of the underlying ecosystem is low = these ETFs may have large spreads and Prem discounts. 4. Transaction fees may be 1%-2%, which is higher than US spot Bitcoin ETFs.

However, Eric Balchunas emphasized: "All of this is obviously good for Bitcoin because it opens up more investment avenues, I just say it's 'child's play' compared to the United States. In the long run, some of these problems may disappear with more liquidity, smaller spreads, lower fees and greater issuer participation, but our expectations in the short/medium term are more moderate."

Adjustments will continue

CryptoQuant analysts believe that there is still a high possibility that the price of Bitcoin will see further adjustments. This is supported by a variety of factors, including a high average 30-day funding rate, resistance at current historical highs, and market settings that allow "large players to establish large positions."

CryptoQuant analyst Gaa said in the report: "Historically, when there is large-scale profit-taking by retail investors, it means that a potential top is forming. After the rapid decline in prices over the past two days, these holders have sold off sharply to cash out."

QCP Capital, a Singapore-based digital asset trading firm, said in a note to investors that buying the dip when major geopolitical conflicts break out has historically been a profitable trade.

Ed Goh, head of trading at liquidity provider B2C2, said the company saw continued buying of BTC, especially during the weekend dip, with 57% of the platform's funds flowing to the buy side, with the analyst adding that Altcoin activity remains high and investors tend to buy Altcoin.

The current overall cryptocurrency market capitalization is $2.32 trillion, and Bitcoin’s market capitalization dominance is 53.66%.

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