Asian Bitcoin Investors Face Volatility Due to Automated ETF Trading Bots: Report

In Asia, investors face turbulent times as automated trading bots react to data streaming from spot Bitcoin exchange-traded funds (ETFs).

A report from Bloomberg indicates that these automated trading bots are potentially causing significant market volatility.

Bitcoin Volatility in Asian Trading Market

Shiliang Tang, president of Arbelos Markets, acknowledged the role played by these automated bots, stating, “From an algorithmic trading perspective, robots can automatically crawl and trade based on this data; it seems that this is what’s happening now.”

Following the conclusion of trading in the U.S. stock market during Asian hours, information regarding the daily demand levels for these spot Bitcoin ETFs spread across the cryptocurrency market. On April 2, Bitcoin witnessed a plunge during the Asian trading session, coinciding with reports of investors withdrawing funds from these ETFs.

According to CoinGecko data, Bitcoin’s price plummeted to $64,650 on April 2, marking a loss of approximately 6% within a day. This downturn triggered a spike in volatility across the broader crypto market. As of the time of writing, Bitcoin stands at around $66,000.

The approval of multiple spot Bitcoin ETF applications by the U.S. Securities and Exchange Commission (SEC) in early January injected approximately $12 billion in net inflows into the market. The peak of ETF inflow coincided with Bitcoin’s new all-time high of $73,737 in mid-March. However, subsequent periods of outflows have contributed to BTC’s current decline of nearly 10% from its peak.

Spot Bitcoin ETF Outflows and Bitcoin Corrections

On Monday, April 1, spot Bitcoin ETF flows returned to negative territory once more, as there was another significant outflow from Grayscale and a smaller one from Ark 21Shares. According to data from Farside Investors, the combined outflow for the eleven spot-based investment products amounted to $85.7 million, equivalent to 1,200 BTC.

Commenting on this development, Bloomberg’s ETF analyst, James Seyffart, expressed surprise, stating, “Honestly higher than I expected,” before further noting, “thought this would have slowed down by now.”

Galaxy Digital CEO Michael Novogratz had previously predicted the possibility of corrections and market consolidation in early March before Bitcoin surged to new highs.

Despite the market’s overheated state, Novogratz maintains an optimistic outlook for the future. He anticipates potential approval for spot Ethereum ETFs by the U.S. Securities and Exchange Commission later in the year.