Gushiken Yona
Recent Bitcoin ETF outflows are injecting a dose of uncertainty into the cryptocurrency market, signaling a pause in the previously strong bullish momentum as investors grapple with broader economic anxieties.
Bitcoin (BTC) closed last week at approximately $96,120, a slight 0.4% decrease from the previous week. While the price remained relatively stable, underlying market sentiment has shifted.
BTC has traded within a narrow range of $94,000 to $100,000 for the past 13 trading days, exhibiting reduced volatility. This consolidation phase reflects overall market uncertainty, largely due to macroeconomic concerns and anticipation surrounding the Federal Reserve’s (FED) and other major central banks’ future interest rate decisions.
Bitcoin ETF Outflows Break Six-Week Streak
The most notable development has been the outflow of nearly $600 million from Bitcoin spot ETFs in the past week. This ended a six-week streak of positive inflows, a shift that, while not unexpected, underscores the market’s sensitivity to external pressures. Historically, sustained periods of positive flows are often followed by a temporary downturn.
Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International (CSE:FNQ), provided context for the recent Bitcoin ETF outflows. “Since mid-September, this marks only the fourth week of negative flow, underscoring the strong demand and overall bullish sentiment for BTC-backed ETPs,” Greco shared in a note seen by The Shib Daily.
This indicates that despite the recent pullback, long-term interest in Bitcoin-backed investment products remains robust. Total net inflows since the inception of these ETFs total $40.1 billion, averaging over $3 billion per month.
Ethereum ETFs Show Resilience
While Bitcoin ETFs experienced a downturn, Ethereum (ETH) spot ETFs displayed greater stability. They recorded a net inflow of approximately $12 million over the same period.
This brings the total inflows for Ethereum ETFs since their launch to $3.2 billion, building upon the positive sentiment observed in Q4 2024. This divergence suggests potential investor diversification within digital asset portfolios or a bet on the long-term prospects of the Ethereum ecosystem.
Bitcoin ETF: Macroeconomic Indicators Hold the Key
The future direction of Bitcoin, Ethereum, and the broader cryptocurrency market is closely tied to macroeconomic developments. Shifting expectations regarding the Federal Reserve’s monetary policy are crucial.
“This reflects a phase of market consolidation and uncertainty, influenced by macroeconomic concerns and speculation over the Federal Reserve‘s (FED) and other major central banks’ future interest rate decisions,” Greco said.
Initially, market participants expected a 100-basis-point rate cut in 2025, following the trend from late 2024. However, recent inflation data, which came in higher than anticipated, have forced a reassessment. Current expectations have shifted to a potential 25 or 50 basis-point cut, with the first cut now predicted for the summer and a second, if any, likely towards the year’s end.
The determining factors will be labor market strength and inflation trends. “A weakening labor market alongside declining inflation could support additional rate cuts, whereas a robust labor market combined with persistent inflation may force the FED to maintain higher interest rates for longer,” Greco said.
Investors keenly observe these key indicators for signals about the FED’s next actions and their potential impact on the cryptocurrency market. The recent Bitcoin ETF outflows could be a temporary reaction to this uncertainty, or a sign of a longer-term shift.
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Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
