Spot Bitcoin exchange-traded funds saw a significant decrease in inflows on Jan. 7, as Bitcoin prices dropped by 5% amidst growing expectations of a more hawkish approach from the Federal Reserve.
Bitcoin, the leading cryptocurrency, had surged above $102,000 the previous day, sparking optimism among investors ahead of President-elect Donald Trump’s upcoming inauguration. However, the gains were short-lived as Bitcoin experienced a 5.7% decline within 24 hours. This decline was attributed to the increase in U.S. bond yields and investor caution surrounding key economic updates, including the Federal Reserve’s meeting minutes and nonfarm payroll data.
The rise in bond yields has led to speculations of a more hawkish stance from the Federal Reserve. Officials have hinted at only two interest rate cuts in 2025, fewer than previously expected. Investors are eagerly awaiting the release of the Fed’s meeting minutes on Jan. 8 for further insights into policymakers’ discussions.
Additionally, a U.S. Labor Department report revealed a six-month high in job vacancies, driven by increased demand in the services sector. This data precedes the upcoming nonfarm payroll report, scheduled for Friday. A stronger-than-anticipated jobs report could reinforce expectations of prolonged Fed tightening, as a strong labor market may continue to fuel inflationary pressures.
The decline in Bitcoin prices led to a sharp drop in inflows for Bitcoin ETFs, with only $52.9 million flowing into the 12 Bitcoin ETFs on Jan. 7. This marked a 94% decrease compared to the previous day’s $987 million inflows. Data from SoSoValue showed that BlackRock’s IBIT was the sole BTC ETF to record inflows, attracting $596.11 million. In contrast, ARK and 21Shares’s ARKB saw the highest outflows, with $212.55 million leaving the fund.
Grayscale’s GBTC and BTC ETFs also experienced significant outflows of $125.45 million and $113.85 million, respectively. Fidelity’s FBTC reported an outflow of $86.29 million, while Franklin Templeton’s EZBC saw a more modest outflow of $5.58 million. The remaining BTC ETFs reported zero flows on the day.
Despite the decrease in inflows, the daily trading volume for these investment products rose to $4.62 billion on Jan. 7, up from $3.96 billion the day before. At the time of writing, Bitcoin was trading at $96,145 per coin.
This article provides a comprehensive overview of the recent developments in the Bitcoin market, highlighting the impact of Federal Reserve policies and economic indicators on investor sentiment and Bitcoin ETF flows.