Record Outflows in Bitcoin ETFs

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Record Outflows in Bitcoin ETFs

Bitcoin ETFs experienced a record outflow of $671.9 million on Thursday, breaking a 15-day streak of positive inflows. This represents the largest daily outflow since their introduction to the market in January. Ethereum ETFs similarly ended an 18-day streak of positive inflows.

Impact of the Fed and reasons for outflows The outflow data was assessed in connection with the market impact of recent comments made by Fed Chairman Jerome Powell. Powell indicated that it is not legally possible for the U.S. Central Bank to hold Bitcoin reserves, which undermined expectations for the establishment of a Bitcoin reserve fund. The uncertainty following the Fed's interest rate cut decision increased selling pressure in the cryptocurrency markets. Powell's stance and revisions in inflation forecasts led to significant sell-offs in riskier market assets.

Details of Bitcoin and Ethereum ETF outflows According to data from Farside and SoSoValue, a total of $680 million exited Bitcoin ETFs. Fidelity's FBTC fund recorded the largest outflow at $208.5 million, followed by Grayscale’s GBTC fund with $188.6 million and ARK Invest’s ARKB fund with $108 million. Funds like BlackRock’s (BLK) IBIT and Franklin Templeton's EZBC remained unchanged, while WisdomTree’s BTCW fund stood out with an inflow of $2.05 million.

Ethereum ETFs also recorded an outflow of $60.5 million. Grayscale’s ETHE fund led the outflows with $58.13 million, while other funds experienced similar losses. However, some funds attracted small inflows, with Fidelity’s FETH and VanEck’s ETHV funds garnering a total of around $10 million. Meanwhile, Ethereum's price dropped by 8.1% to $3,378.

Bitcoin fell below $96,000, losing 4.4%, while the overall cryptocurrency market showed a decline of 4.5%. This situation was associated with the Fed’s cautious stance and uncertainty regarding potential future interest rate cuts.

This shift in investor sentiment led to a decrease in total market value to $3.51 trillion. The markets will closely monitor how they respond to such developments from the Fed and how long these sell-offs may continue in the short term.