As an experienced financial analyst, I believe that the recent outflows from Spot Bitcoin ETFs have significantly impacted Bitcoin’s price action. The large-scale withdrawals from funds like Grayscale’s Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund have led to increased selling pressure in the market, causing Bitcoin’s price to decline.
Since the beginning of this month, there has been a noticeable decrease in interest for Spot Bitcoin Exchange-Traded Funds (ETFs). This trend was highlighted by significant outflows on April 26. Consequently, the crypto market as a whole has felt the impact, with Bitcoin’s price being affected by unfavorable market circumstances.
Spot Bitcoin ETFS Record $217 Million Of Outflows
On April 25th, Farside Investors announced via a post on X (previously Twitter), that there were approximately $217 million worth of withdrawals from Spot Bitcoin Exchange-Traded Funds (ETFs) – one of the largest outflows recorded this month. A significant portion of these funds, around $139.4 million, were withdrawn from Grayscale’s Bitcoin Trust (GBTC).
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Several other Bitcoin ETFs experienced withdrawals in recent days. Ark Invest’s Spot Bitcoin ETF had an outflow of $31.3 million, while Valkyrie and Bitwise recorded $20 million and $6 million in daily outflows, respectively. Importantly, Fidelity’s Wise Origin Bitcoin Fund (FBTC) saw its first net withdrawal since approval, with a total of $22.6 million being taken out on Thursday.
During the past two days, iShares Bitcoin Trust (IBIT) by BlackRock experienced no new investments, marking the second consecutive day with no inflows. While there have been no net daily outflows since the fund’s launch, this lack of inflows is noteworthy, as IBIT had enjoyed 71 straight days of daily inflows before April 24.
The redemption demands for Spot Bitcoin ETFs have triggered a surge in selling by the funds, resulting in a noticeable drop in Bitcoin’s price. This selling pressure has given the advantage to the bearish market sentiment, as evidenced by Coinglass data indicating more long positions than short ones being liquidated within the past day.
Macro Economic Factors Also Affecting Bitcoin’s Price
An initial estimate released by the Bureau of Economic Analysis on April 25 showed that the US Gross Domestic Product (GDP) grew at an annual rate of 1.6% in the first quarter, which was way below expectations. This data report further diminishes hopes of rate cuts this year and looks to have played out in investors’ minds as Bitcoin briefly dropped below $63,000 following the report’s release.
As a crypto investor keeping a close eye on economic indicators, I’m eagerly anticipating the upcoming release of the Personal Consumption Expenditures (PCE) inflation data on April 26. If this report surpasses expectations, it could intensify fears that interest rate cuts may be a remote possibility in 2023.
The actions taken by the Federal Reserve regarding interest rates can have substantial consequences for riskier investments, such as cryptocurrencies. Should the Fed adopt a more aggressive monetary policy stance, this may lead to unfavorable conditions for the crypto market.
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2024-04-26 17:11