Bitcoin ETFs See $457M Inflows Ahead of US CPI Report

Key Notes

• BTC ETFs saw a net inflow of $457 million while Bitcoin saw high volatility.
• The US CPI report is expected to trigger the “Santa Claus rally”.
• The senior economist at Interactive Brokers believes the CPI will fall to 2.9%.

The expectations of a lower US Consumer Price Index reading triggered notable institutional inflows and wild token volatility for the crypto ecosystem.

Firstly, US-based spot Bitcoin BTC $87 272 24h volatility: 1.0% Market cap: $1.74 T Vol. 24h: $50.51 B  exchange-traded funds saw a net inflow of $457.3 million on Wednesday, Dec. 17, according to data from Farside. Fidelity’s FBTC and BlackRock’s IBIT led the inflows, each worth $391.5 million and $111.2 million, respectively.

On the other hand, spot Ethereum ETH $2 853 24h volatility: 2.5% Market cap: $344.54 B Vol. 24h: $26.57 B ETFs recorded a net outflow of $22.4 million, their fifth-consecutive outflow, according to Farside.

Bitcoin saw a sharp rise from $87,000 to above $90,000 on Dec. 17, but within hours, the leading digital asset plunged below the $86,000 mark.

It’s not just Bitcoin. The global crypto market cap increased by around $80 billion, but just like the Bitcoin price, it decreased by roughly $120 billion in the same timeframe, according to CoinMarketCap data. 

The sharp volatility triggered nearly $400 million in liquidations on the same day, as 123,200 traders saw their assets vanish. The Coinspeaker report added that some analysts have been calling the movements “market manipulation.”

Inflation Reports on the Way

The US CPI report has proven to have a strong impact, at least short-term if not sustained, on financial markets like stocks and crypto.

For instance, Bitcoin-related products registered an inflow of $931 million after the US CPI report in October, which showed the deceleration in the inflation rate to 0.2% for September compared to July’s 0.3%.

However, the momentum was short-lived. Even the third consecutive US Fed interest rate cut couldn’t act as a long-term bullish catalyst for the crypto market. 

This time, José Torres, senior economist at Interactive Brokers, told CNBC that the Thursday US CPI reading could trigger the “so-called Santa Claus rally.” Torres expects the inflation rate to cool down to 2.9% year-over-year for November. The October CPI rate has reportedly been skipped due to the government shutdown.

The economist believes that the expectations of an easing inflation rate, keeping it between 2% and 3%, will “allow more interest rate cuts next year.”

In addition to the US CPI, the Bank of Japan will also release its national CPI report for November on Friday, Dec. 19. The BOJ will also announce its interest rate decision after its meeting on Dec. 18-19.

next