Fidelity moves nearly 4,000 BTC after ETF outflows

After a few days of deep outflows from Bitcoin (BTC) ETFs, the fund wallets have started moving coins. Fidelity, one of the last net buyers of coins, shifted multiple tranches of BTC out of its custodial wallet. 

Fidelity, one of the ETF providers that also provides custodial services, is moving coins from one of its main wallets. Fidelity sent out several identical transactions of 200 BTC, which landed in previously unmarked wallets. 

Each transaction was then split into two addresses containing 50 BTC and another one with 99.99 BTC. For now, there are no signs of the coins being sold or sent to the open market. Unlike BlackRock and other funds, Fidelity does not hold its assets with Coinbase Custody.

The wallet transfers are taking place after all ETFs shed BTC, potentially leading to the selling or movement of 10,428 BTC . The recent outflows from Fidelity follow previous signs of selling, tracking up to 16K BTC sold in August.

The outflows from the cold wallet follow a few turbulent days, where BTC dipped as low as $55,000. While the turbulence was expected for crypto natives, ETF traders sold in panic, requiring outflows from custodial wallets. The custodians of BTC for the ETF are also not always selling their coins on the open market; instead, they ensure other liquidity deals.   

The Bitcoin ETF sales coincided with ongoing outflows for Ethereum (ETH) as well. Grayscale continued selling , moving 15.47K ETH in four transactions to Coinbase Prime. ETH remains depressed, trading at $2,413.25 after a 60% drawdown in the past six weeks. 

Institutional holders also sell BTC

Ceffu, formerly Binance Custody for institutional BTC buyers, also showed outflows to Binance’s hot wallets. More than 3K BTC flowed out of Ceffu’s wallets since August 26. 

Ceffu activity is still robust, also involving inflows from altcoins and tokens. The custodial service shows no signs of capitulation, with activity on Ethereum, BNB Smart Chain, as well as Tron. 

The recent selling from Ceffu’s wallets follows another shift of 3,565 BTC from July 31 onward, coinciding with August’s big market correction. 

In August, most institutions continued to shed coins, with only BlackRock showing no moves from their known wallets. Outflows came from Grayscale and Ark Invest, challenging the market to absorb up to 23K BTC.

While institutions and whales may be dedicated to holding, the biggest market pressure comes from short-term buyers. On average, BTC investors are in the money with a 50% gain, but short-term buyers still hold unrealized losses. BTC still trades around 22% from its all-time high, a relatively small drawdown.

Only around 2.9% of BTC is held with an unrealized loss, based on Glassnode research. For now, short-term investors are not showing panic tied to a full bear market, instead they’re prepared for a longer period of choppy sideways trading. 

At the current BTC price range, Glassnode categorizes the overall sentiment as an ‘enthusiastic bull market.’ The researchers warn BTC must hold above $51,000 to warrant further appreciation and avoid capitulation. 

BTC showing slower accumulation

BTC continues to show some price weakness, sinking to $56,786.55. Trading volumes for BTC’s trading volume remain relatively unchanged at around $30-35B in 24 hours. So far, the leading coin has not entered panic-selling, and liquidations happened without contagion effects. 

Based on the Rainbow chart model, BTC has moved down to the ‘fire sale’ range, further extending accumulation.

At the same time, BTC’s volatility shrank again, from a 3% peak in the past 30 days to an average of 2%. Whale activity has also diminished after peaking in the summer of 2024, as most of the shifts in balances were completed. BTC holders also expanded the number of new wallets containing 10K BTC to 1000 wallets. 

In the past 24 hours, the majority of large-scale whale transactions involved stablecoins, as additional liquidity is still awaiting better market entry points. BTC did not see whale transactions for more than a day.

The Bitcoin network usually shows peak transactions and whale activity during days of record prices. Even with a range-bound Bitcoin, accumulation and holding behaviors continue, with no signs of selling and capitulation. Miners also still hold close to 2M coins, with relatively slow divestment of new coins. 

Cryptopolitan reporting by Hristina Vasileva