On Tuesday, June 18, 2024, the price of Bitcoin stood at US$65,210.11, showing a decrease of 1% within the last 24 hours.
Bitcoin Exchange Traded Funds (ETFs) in the United States have been witnessing a wave of withdrawals amounting to $580.6 million, attributed to the Federal Reserve’s aggressive approach towards interest rates. In contrast, investments in Ether-based products have been on the rise, indicating a shift in investor sentiment towards cryptocurrencies.
This trend with Bitcoin ETFs in the US is not an isolated incident. Globally, digital asset investment products have experienced significant withdrawals in the past three months, surpassing $600 million. The consistent inflows into spot Bitcoin ETFs that were observed recently seem to have come to a halt. Following five weeks of consecutive fundraising, there was a sudden change last week, resulting in a total net outflow of $580.6 million.
Analysts link this shift to the recent Federal Open Market Committee (FOMC) meeting outcome, where a more stringent stance was taken than expected. The Fed maintained interest rates at 5.5% and hinted at a potential single rate cut by the year’s end. This cautious approach towards inflation has led many investors to steer clear of riskier assets like Bitcoin, prompting the outflows from ETFs.
Despite over 19 days of continuous inflows accumulating more than $4 billion, spot Bitcoin ETFs saw this streak interrupted last Monday due to a drop in Bitcoin prices following mixed economic reports in the US. Withdrawals were notable across various funds, with Grayscale Bitcoin Trust (GBTC) leading the pack with outflows of $274.3 million. ARK Invest’s ARKB and Fidelity’s FBTC also experienced significant outflows, totaling $149.7 million and $146.3 million, respectively. BlackRock’s IBIT was an exception, attracting $41.6 million in new investments.
Meanwhile, Ether products displayed resilience and attracted fresh investments while Bitcoin products faced challenges. Last week, Ether products globally saw a net inflow of $13 million, showcasing a strong interest in Ethereum.
The disparity in investment flows between Bitcoin and Ether products is expected to widen, especially with speculations that the US Securities and Exchange Commission (SEC) may approve spot Ether ETFs by the end of summer. Experts predict that these new ETFs could capture 10 to 20% of the current flows directed towards Bitcoin ETFs.
Disclaimer: The opinions expressed in this article are for informational purposes only and do not constitute financial or investment advice. Investing in cryptocurrencies carries a risk of financial loss.
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