Fidelity’s spot Bitcoin ETF recorded more inflows than GBTC outflows on Monday. All eyes are currently on the FOMC meeting ahead this week as investors’ keenly watch Fed’s take on rate cuts.
The world’s largest cryptocurrency Bitcoin (BTC) is back in action gaining 3% in the last 24 hours and moving all the way to $43,500. This price resurgence comes as the strong inflows into Bitcoin ETFs have successfully managed to outpace the net outflows from the Grayscale Bitcoin Trust (GBTC). One major reason is also that the GBTC outflows have now slowed down to under $200 million per day.
Bitcoin ETF Flow – Day 12
GBTC flow data out
— BitMEX Research (@BitMEXResearch) January 29, 2024
On Monday, January 29, GBTC witnessed net outflows of $192 million. As of January 29, 2024, Grayscale holds 496,573.8166 Bitcoins, with GBTC’s AUM standing at around $21.431 billion. Following the approval of the spot ETF, Grayscale users executed the sale of a total of 120,500 BTC, amounting to approximately $5.508 billion.
There’s a staggering 70% drop in GBTC outflows from $641 million over the last week. Similarly, GBTC reflects a nearly 25% decline compared to $255 million on January 26.
On the contrary, on Monday, Fidelity’s spot Bitcoin ETF recorded net inflows of $208 million clearly outpacing the GBTC outflows. Crypto traders are keenly observing any indications of diminished GBTC outflows as investors in the fund seize the opportunity to exit their previously underwater positions. JPMorgan analysts mentioned on January 25 that GBTC outflows have exerted downward pressure on Bitcoin prices but added that this impact “should be largely behind us”.
Bitcoin ETF Trading Volumes Surge
As of January 29, the collective trading volume for the nine new US spot Bitcoin ETFs reached $994.1 million, nearly doubling that of GBTC, which recorded a volume of $570 million. Preliminary trading data from Bloomberg indicated that iShares Bitcoin Trust (IBIT) had exceeded GBTC in terms of trading volume. However, by the end of the day, GBTC held the liquidity crown.
— James Seyffart (@JSeyff) January 29, 2024
The sustained interest in BTC Spot ETFs suggests a continued shift in investor preference from using traditional cryptocurrency trading platforms to opting for regulated financial products.
This surge in ETF inflows coincides with the broader crypto market’s anticipation of the Federal Reserve’s forthcoming decision on interest rates. Investors are closely monitoring how the central bank’s actions may impact liquidity and investment strategies across various asset classes, including digital currencies.
Market participants are particularly attentive to the Fed’s tone and future guidance, recognizing that any indication of a dovish pivot or persistence of a hawkish stance on inflation could have immediate effects on risk assets, including cryptocurrencies. A more lenient approach might heighten risk appetite, potentially directing more capital into Bitcoin and the newly launched ETFs.
Popular crypto analyst Michael van de Poppe expects the BTC price to hit $50,000 before Bitcoin halving, scheduled in April 2024.
“Bitcoin consolidating at $43K after a correction to $38.5K. Perhaps another run to $48-50K happens pre-halving, but the outpeformance is likely happening with altcoins. Remember; we’re in a bull market and the ETF approval is more significant than you might think it is,” said Poppe.