The crypto market had a rough week, with Bitcoin taking a hit. Investors seemed to pull back, especially from the popular Bitcoin spot exchange-traded funds (ETFs) in the United States. These funds, which track Bitcoin’s price, recorded significant outflows as hopes for interest rate cuts faded.
By Thursday, these US spot Bitcoin ETFs had seen a total net outflow of $484.2 million for the week. This figure came after a notable $258 million left the funds just on Thursday alone. It marks a sharp turnaround, as only one daily inflow had been recorded that week, with Friday’s numbers still pending.
This negative trend is quite a change. In the four weeks leading up to this, the same Bitcoin ETFs had attracted more than $3.9 billion in new money. It shows how quickly market sentiment can shift. Most ETFs faced heavy selling during Thursday’s session. BlackRock’s IBIT fund was an exception, bringing in $79.7 million. However, this positive inflow wasn’t enough to cover the large amounts pulled from eight other funds. Fidelity’s FBTC saw the biggest loss, with $114.8 million in outflows. Bitwise’s BITB wasn’t far behind, losing $80 million. Meanwhile, ETFs from Invesco, WisdomTree, and Hashdex remained steady, reporting no net gains or losses.
Economic Data Shakes Bitcoin and ETFs
The outflows from these ETFs happened as Bitcoin’s price dropped sharply. The cryptocurrency fell to its lowest point in over four weeks, hitting $108,776, according to CoinGecko. This shows a growing reluctance among crypto investors to take risks.
This shift in mood is largely tied to new economic data from the US. These figures suggest that the US Federal Reserve (FED) might delay its next interest rate cuts. The FED made its first rate cut of 25 basis points this year just last week. It plans to meet again in October to talk about another cut.
The US Commerce Department recently updated its report on the second quarter’s Gross Domestic Product (GDP). It showed the economy grew at an annual rate of 3.8%. This was higher than the earlier guess of 3.3% and the first estimate of 3%. Such strong economic growth often means the FED doesn’t need to cut rates to boost the economy. As a result, the chances of no rate changes in November rose from 8% to 17%, according to FedWatch data from CME.
Thursday saw a big sell-off across the crypto market. More than $1.1 billion worth of trading positions were closed out. This highlights how risk-averse investors had become. On Friday, traders were also watching the Personal Consumption Expenditures (PCE) price index report closely. That report showed consumer spending in August was higher than expected, adding more pressure to the market.
At the time of this writing, Bitcoin’s price sits just under $109,000. It has dropped 2.3% in the last 24 hours. This also puts it 12% below its all-time high of $124,000 recorded last month, as per CoinGecko. Despite these recent outflows, the spot Bitcoin ETFs have had a successful run since their launch in January 2024. They have gathered a net total of $57.2 billion in inflows. Their total assets under management reached $144 billion after Thursday’s trading.
Sources: SoSoValue, CoinGecko, FedWatch by CME.