US bitcoin funds have started selling

On Friday investors took $643.2 million out of the US spot bitcoin funds, the most on any day since June. On Monday they took money out again, and the two days together come to just over a billion dollars. Bitcoin reads $76,688 this morning.

We set a test on Friday. If the funds lost more than $400 million between then and this Thursday with bitcoin under $78,000, the May pattern had begun. They have lost more than twice that in two days, and bitcoin is under the line. By the test we wrote, it has begun.

Most readers will have expected the funds to buy this dip. They bought the last one: after two heavy days of withdrawals on 22 and 23 October they took money in on the next four days, through the Fed's hold and the inflation report, and the price held. Thursday's hack looked like one more hour of forced selling for them to buy into.

Our record puts the size of these two days somewhere else. Since the record began in April, investors had taken a billion dollars out of the funds over two days only three times, all during bitcoin's fall in May and June: twice in the middle of the fall and once at its end. No two days from July to October came close, and the two October days before the buying came back were a good deal smaller.

Two of those three times, bitcoin was lower a fortnight later, once by nearly a fifth. The third time, those two days marked the bottom and the price rose. So two days this heavy have usually meant more selling, and once they marked the end.

Whether this is 22 October or 18 May is the question, and the record answers it with something to watch rather than a count.

What marked May out in our record was how long the buying took to come back. From 18 May investors took money out of the funds every trading day for nearly three weeks, with bitcoin falling under what their own buyers had paid in the third week and the selling running on past it. On 22 October the buying came back on the very next day, and stayed for four.

So the test now is simple to state, and the funds answer it one day at a time: when does the buying come back, and does it stay. In May the first buying day came on the twelfth trading day, and it wasn't the end.