Bitcoin ETFs experienced big outflows on Aug. 29, with BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund among the hardest hit. U.S.-based spot Ether ETFs also faced minor outflows on the same day. Despite this, analysts see potential for Bitcoin’s price to rally, supported by the decreasing Bitcoin reserves on exchanges. Meanwhile, El Salvador’s President Nayib Bukele acknowledged that Bitcoin adoption in the country has been much slower-than-expected, and Dell Technologies’ recent earnings report showed no Bitcoin holdings, despite CEO Michael Dell's previous hints on social media.
Bitcoin ETFs Hit with Heavy Outflows
On Aug. 29, BlackRock’s iShares Bitcoin Trust (IBIT) recorded its second-ever day of outflows of $13.5 million. The previous time, IBIT suffered outflows of $36.9 million on May 1. This latest outflow contributed to a total of $71.8 million in joint net outflows across 11 U.S.-based spot Bitcoin ETFs on Aug. 29, according to data from Farside Investors.
Bitcoin ETF flow (Source: Farside Investors)
Among the Bitcoin ETFs, Fidelity’s Wise Origin Bitcoin Fund (FBTC) experienced the largest outflows at $31.1 million, followed by the Grayscale Bitcoin Trust (GBTC) with $22.7 million. The ARK 21Shares Bitcoin ETF (ARKB) was the only fund that recorded a net inflow of $5.3 million. These outflows come during a broader decline in Bitcoin’s price, which fell by close to 3% over the past week.
Meanwhile, U.S.-based spot Ether ETFs also saw minor outflows on Aug. 29, totaling $1.7 million. The Grayscale Ethereum Mini Trust (ETH) was the only fund to register a net inflow of $3.6 million, but it was not enough to counterbalance the $5.3 million outflows from its higher-fee counterpart, the Grayscale Ethereum Trust (ETHE).
ETHE has been struggling with outflows nearly every day since its launch in July, and has accumulated a total of $2.56 billion in outflows. The price of ETH has also been affected, and is down by over 5% on its weekly time frame.
Ethereum ETF flow (Source: Farside Investors)
Bitcoin Exchange Reserves Hit New Lows
Despite the fact that Bitcoin ETFs are facing outflow challenges, there are some positive signs about BTC’s possible next price move. The amount of Bitcoin held on crypto exchanges has reached a new low, which may serve as the catalyst for Bitcoin to successfully retest and move above the $60,000 mark.
CryptoQuant analyst Gaah pointed out that Bitcoin reserves on exchanges are hitting new lows for the year, which could indicate reduced selling pressure and could potentially favor a bull market if demand continues to grow. According to CryptoQuant data, Bitcoin reserves on exchanges have decreased by almost 12.9% since Jan. 1. This means that there are 2.62 million Bitcoin across all major exchanges.
Gaah’s analysis (Source: CryptoQuant)
Gaah believes that the Bitcoin moving to cold wallets generally signals that investors are committed to holding the asset long-term and are optimistic about its price potential.
The declining supply of Bitcoin on exchanges comes as a number of analysts are predicting that Bitcoin’s price may rally in the fourth quarter of 2024, based on historical data. Gaah also shared that the increase in long-term Bitcoin holders will likely lead to a more resilient market that is less prone to large panic sales. When there is less Bitcoin available on exchanges, there is less liquidity available for immediate sale, which could potentially support price stability.
Crypto trader MartyParty also recently commented on the ultra-low Bitcoin reserves, and believes that something important may be happening. Bitcoin for Freedom, another crypto commentator, warned that a supply shock could be around the corner as close to 56,000 Bitcoin have been moved off exchanges in the past week.
Long-term Bitcoin holders have spent over $10 billion to acquire BTC and have been pulling back from selling as its price has declined from its peak of $69,000.
El Salvador’s Bitcoin Adoption Slower Than Expected
While analysts expect the BTC price to go up soon, Salvadoran President Nayib Bukele recently acknowledged that the country's adoption of Bitcoin as legal tender has not progressed as much as he hoped. In a Time magazine interview that was released on Aug. 29, Bukele described Bitcoin adoption in El Salvador as "net positive" but admitted that it has still not brought the widespread benefits he anticipated.
While many Salvadorans use Bitcoin and major businesses in the country accept it, Bukele admitted that the adoption rate has fallen short of expectations.
Bukele also addressed his somewhat controversial leadership style during the interview, which Time magazine referred to as "the world's most popular authoritarian." Since taking office in 2019, Bukele has overseen a big drop in El Salvador’s homicide rate. However, his government has faced accusations of human rights violations, especially in its crackdown on gang activity. Bukele dismissed concerns about being labeled authoritarian, and stated that it does not bother him much.
Bukele attracted international attention in 2021 when he announced plans to make El Salvador the first country to adopt Bitcoin as legal tender. He unveiled the move at the Bitcoin Conference in Miami.
Since then, he has pushed forward with ambitious projects like a volcano-powered "Bitcoin City" and a citizenship program for those investing $1 million in Bitcoin or USDT. Bukele also frequently shares updates about the country’s Bitcoin purchases on social media, and claims that El Salvador has approximately $400 million in its "public wallet alone." After winning re-election in February, Bukele is expected to be president until 2029.
Dell Earnings Soar Without Bitcoin
Meanwhile, Dell Technologies did not include any Bitcoin on its balance sheet for the second quarter of the year, despite recent speculation that was fueled by crypto-themed social media posts from CEO Michael Dell. In its Aug. 29 filing, the company reported strong earnings driven by growing demand for AI but made no mention of Bitcoin at all in its earnings call or results filing.
The absence of Bitcoin turned quite a few heads, especially after Dell's social media activity led many to believe the tech giant might be considering a Bitcoin purchase.
In a June 20 post on X, Dell hinted at his interest in Bitcoin by stating, "Scarcity creates value," which is a phrase that is very often associated with Bitcoin because of its limited supply of 21 million. This was followed by his engagement with MicroStrategy CEO Michael Saylor, who is a well-known Bitcoin advocate. Other posts from Dell included a poll where Bitcoin won as the most important topic and a comment on BlackRock CEO Larry Fink’s newfound interest in Bitcoin.
Despite these hints, Dell's financial results showed no signs of Bitcoin or other cryptocurrencies on the company’s balance sheet. Typically, companies share their digital asset holdings in financial filings. Tesla, MicroStrategy, and a few others have done this and have integrated Bitcoin into their treasury strategies. MicroStrategy is still the largest corporate holder of Bitcoin, with 226,500 BTC valued at $13.5 billion.
Dell Technologies’ Q2 earnings exceeded expectations. This was mostly due to the booming demand for AI solutions. The company reported total revenue of $25 billion, up 9% from the previous year. It also revealed record server and networking revenue of $7.7 billion, an 80% increase year-over-year.
Vice Chairman and COO Jeff Clarke believes the higher earnings is due to the accelerating momentum of AI, and pointed out that AI-optimized server demand reached $3.2 billion, a 23% sequential increase, contributing to a year-to-date total of $5.8 billion.
