In the week ending April 26, CoinShares’ analysis unveils a significant $435 million departure from cryptocurrency investment products, marking the third consecutive week of outflows. Amidst Bitcoin’s stagnant performance in the low $60,000 range, exchange-traded products (ETPs) continue to bleed funds.
The report reveals that Bitcoin funds spearheaded the outflows, with a massive $423 million exiting the market following the halving event. Meanwhile, Ether investment products sustained their seventh straight week of negative flow, with withdrawals totaling $38 million.
However, amidst the gloom, Solana and Litecoin ETPs provided a glimmer of hope, witnessing net inflows of $4.1 million and $3.1 million, respectively.
Recent data from CoinShares underscores a notable decline in cryptocurrency investment product inflows, shedding light on the consecutive weeks of negative outflows. The report indicates a deceleration in new issuer inflows, with only $126 million recorded last week, down from $254 million the previous week.
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BlackRock’s IBIT Sees Zero Flows
Adding to the concerns, insights from Farside Investors reveal that BlackRock’s Bitcoin ETF, IBIT, registered ‘zero flows’ for the first time last week. This development comes amidst a trend where other issuers also encountered several days of zero inflows in recent weeks, coinciding with the decelerating outflows from Grayscale’s GBTC.
Market apprehensions surrounding U.S. stagflation, characterized by a combination of sluggish economic growth and persistent inflation, are believed to be the primary catalyst behind the recent negative outflows. This economic backdrop further dampens expectations for Federal Reserve rate cuts.
According to data from the CME FedWatch tool, traders currently assign a mere 11.3% probability to a rate cut in June, contrasting sharply with probabilities of 44.8% for September and 43.8% for November. This suggests that market analysts anticipate the Fed will maintain interest rates unchanged in May and June, with the likelihood of any rate adjustments postponing until later in the year.
Bitcoin Bull Run Pausing Briefly
According to analysts at the brokerage firm Bernstein, the recent deceleration in spot Bitcoin ETF inflows shouldn’t be interpreted as the onset of a hostile trajectory. Instead, they characterize it as a transient hiatus—a mere “short-term pause” in the ongoing journey before Bitcoin recommences its bullish ascent.
We don’t expect the Bitcoin ETF slowdown to be a worrying trend, but believe it is a short-term pause before ETFs become more integrated with private bank platforms, wealth advisers and even more brokerage platforms.
Gautam Chhugani and Mahika Sapra, Bernstein analysts
The analysts reiterated their ambitious projection of a $150,000 price target for Bitcoin by the conclusion of 2025, underlining the significance of “unprecedented ETF demand.” Since their introduction to the market on January 11, spot Bitcoin ETFs have attracted a staggering $12 billion in net inflows, fueling optimism regarding Bitcoin’s trajectory.
In a recent publication, Ecoinometrics urges its audience to remain vigilant for any shifts in financial dynamics that could potentially “make or break” the ongoing Bitcoin bull market. The report delves into the critical role of spot Bitcoin ETFs in introducing a fresh stream of demand.
However, it also highlights the susceptibility of the market to broader macroeconomic forces and the Federal Reserve’s efforts to curb inflation, which could pose challenges to the bullish momentum.
Ecoinometrics reports that the Federal Reserve Bank of Chicago’s National Financial Conditions Index (NFCI), a vital gauge of the tightness within the U.S. financial system, is currently experiencing a plateau, maintaining a level reminiscent of that observed in 2022 when interest rates commenced their upward trajectory.
In anticipation of potential market shifts, QCP Capital highlighted a forthcoming positive catalyst in the form of the Hong Kong Bitcoin and Ethereum spot ETFs, slated to commence trading in the upcoming week.
There’s a mounting interest in the possibility of these ETFs serving as a conduit for the influx of institutional capital from Asian markets, marking a significant development worth monitoring closely.