(Bloomberg) -- Bullish Bitcoin traders appear to have scaled back their bets on the world’s largest cryptocurrency as its two major tailwinds subside. 

The Bitcoin funding rate — the premium paid by traders to open new long positions in the token’s perpetual futures market — on April 19 turned negative for the first time since October 2023, CryptoQuant data shows. 

The metric underscores a moderation in demand for Bitcoin after a period in which a batch of US spot-Bitcoin ETFs drove the token to record highs. 

Net inflows to those ETFs have waned in recent weeks, while the hotly-anticipated halving, a quadrennial event that slashes rewards earned by miners that secure the blockchain and reduces the supply of new coins in the market, had a minimal impact on Bitcoin’s price last week. 

Bitcoin reached a peak of $73,798 in March but has corrected nearly 13% since, trading at $64,214 as of 08:35 a.m. on Thursday in London. Buyers’ enthusiasm for the original cryptocurrency has cooled in part due to growing risk aversion linked to tensions in the Middle East, as well as anticipated delays to Federal Reserve rate cuts.

Bitcoin funding rates hit a three-year high in March, signaling an overheated market, but as of Tuesday were below zero. “It certainly means that the desire for traders to open long positions has eased,” CryptoQuant’s Head of Research Julio Moreno said. 

Vetle Lunde, analyst at K33 Research, said the current 11-day neutral-to-below-neutral funding rate streak is unusual, with past dips promptly followed by a flurry of leveraged bets. “In that regard, the lengthy nature of this perp discount could point toward further price consolidation,” he added.

The funding rate drop-off coincides with a decline in daily inflows into the US spot-Bitcoin ETFs. 

So far this month the group of 11 products has seen a net inflow of $170 million, far less than the $4 billion they reaped in the same number of trading days in March, according to data compiled by Bloomberg.

Open interest at Chicago-based CME Group’s Bitcoin futures market is also down 18% from a record high, a sign of wavering interest in crypto-related exposure and hedging among US institutions.

As the crypto market looks for fresh tailwinds, all eyes are on Hong Kong, which will soon debut its own crop of spot-Bitcoin ETFs. Whether they can entice even a fraction of the demand enjoyed by US issuers remains to be seen. 

©2024 Bloomberg L.P.