Bitcoin ETF Sees Largest Outflows This Year Amid Dollar Outflows

Bitcoin ETF Sees Largest Outflows This Year Amid Dollar OutflowsUS Bitcoin spot exchange-traded funds (ETFs) have experienced their longest streak of daily net outflows so far this year, marking a wider pullback in risk assets across the US.Data from Bloomberg shows that investors withdrew nearly $1

Bitcoin ETF Sees Largest Outflows This Year Amid Dollar Outflows

US Bitcoin spot exchange-traded funds (ETFs) have experienced their longest streak of daily net outflows so far this year, marking a wider pullback in risk assets across the US.

Data from Bloomberg shows that investors withdrew nearly $1.2 billion from 12 Bitcoin ETFs in the eight trading days ending Sept. 6. This comes amid a broader market slump in US stocks and commodities, driven by economic growth concerns.

Reports suggest an increasing correlation between Bitcoin's performance and the US stock market.

Bitcoin prices have been under pressure throughout September. Bloomberg data shows the cryptocurrency has fallen about 7% this month before a modest rebound, trading at about $54,870 as of 1 p.m. Singapore time on Sept. 9.

Sean McNulty, head of trading at liquidity provider "Cobbler Knife Markets," said the minor bounce in Bitcoin prices might have been partially driven by some key market players covering their short positions.

Caroline Mouron, co-founder of liquidity provider for digital asset derivatives, "Orbit Markets," said Bitcoin is likely to trade between $53,000 and $57,000 before the US releases its consumer price index data on Sept. 11. Mouron believes the latest inflation report will shape the market's expectations concerning the pace of the Federal Reserve's interest rate cuts.

From last quarter of 2022 to the first quarter of 2023, Bitcoin prices climbed significantly, fueled by both the inability of traditional markets to satisfy investment or speculative demands and the historical loosening of Bitcoin regulations by US regulators, leading to a massive influx of US dollar funds into the Bitcoin ETF market. However, Bitcoin prices have been significantly volatile since the second quarter of this year.

In January, the US Securities and Exchange Commission approved Bitcoin spot ETFs, allowing several companies to list their Bitcoin spot ETF products. This enabled institutional and retail investors to invest in Bitcoin through traditional stock accounts without directly holding the cryptocurrency.

This outflow trend reflects concerns about the US economic outlook and investors' risk-off sentiment. With the Fed continuing to raise interest rates, the market anticipates an increasing risk of recession, negatively impacting the valuations of risk assets.

Furthermore, Bitcoin prices are influenced by multiple factors, such as regulatory policies, market sentiment, and technological advancements. The trajectory of Bitcoin prices remains uncertain.

Investors should carefully assess risks and develop investment strategies aligned with their individual investment objectives.

Here is a detailed breakdown of the article's analysis of the outflows from Bitcoin ETFs:

• Duration: Bloomberg points out that this is the longest continuous period of daily net outflows this year, suggesting the trend has been ongoing for some time.

• Scale: Investors withdrew nearly $1.2 billion from 12 Bitcoin ETFs in eight trading days, a substantial amount.

• Reasons: The outflows are tied to concerns about US economic growth and investors' risk-off sentiment.

• Market Impact: Bitcoin prices have been under pressure recently, partially due to the outflows, indicating a decline in investor confidence in Bitcoin.

The article also highlights these key points:

• Increasing correlation between Bitcoin prices and US stock market performance: This reflects the market's anxiety over US stocks spilling over into the Bitcoin market.

• Bitcoin is likely to trade between $53,000 and $57,000: This prediction suggests market expectations of continued volatility in Bitcoin's price in the near term.

• The pace of the Federal Reserve's interest rate cuts will influence market sentiment: Investors are watching the Fed's monetary policy closely as it will directly impact market interest rates and the economic growth outlook.

Conclusion:

The persistent outflows from US Bitcoin ETFs are a notable signal, reflecting concerns about the US economic outlook and Bitcoin's future. Investors should closely monitor market dynamics and develop well-informed investment strategies to manage potential risks.