On September 18, 2024, Bitcoin spot ETFs in the U.S. experienced net outflows of $52.83 million, marking a halt to a four-day streak of net inflows totaling over $500 million. This shift followed the market's reaction to the Federal Reserve's recent decision to cut interest rates by 50 basis points. The main contributor to the outflows was the ARKB fund from Ark Invest and 21Shares, which saw withdrawals of $43.41 million, according to data from SoSoValue.
Bitcoin Trust and Other Fund Withdrawals
The Grayscale Bitcoin Trust (GBTC) also recorded net outflows of $8.13 million, while Bitwise's BITB fund saw smaller withdrawals of $3.95 million. The only Bitcoin spot fund to report net inflows was Grayscale’s Bitcoin Mini Trust, with a gain of $2.66 million. Other major funds, including BlackRock's IBIT, did not see any significant daily movements.
Despite these short-term outflows, Bitcoin ETFs as a whole saw a daily trading volume of $1.63 billion, with a cumulative net inflow of $17.44 billion. This reflects the continued strong interest from investors, signaling that confidence in Bitcoin's long-term growth potential remains high, even amid short-term fluctuations. The high trading volumes demonstrate a robust market, with solid participation from institutional and retail investors alike.
Ether ETFs Struggle with Significant Outflows
In contrast to Bitcoin, Ether spot ETFs faced more significant challenges, recording total outflows of $9.74 million. The majority of Ether ETFs remained inactive, with only two of nine showing net movements. Grayscale’s ETHE fund led the outflows with $14.66 million withdrawn, while BlackRock’s ETHA fund reported a modest inflow of $4.92 million. Daily trading volume for Ether funds reached $221.88 million, up from $176.26 million the previous day.
Since their introduction in July, Ether ETFs have accumulated a net outflow of $615.58 million, indicating that investor confidence in the Ether market is wavering. The significant outflows suggest that investors may be increasingly cautious about Ether, likely due to its ongoing volatility. This trend highlights Ether's struggle to maintain momentum in the ETF space, as many investors are adopting a wait-and-see approach, awaiting clearer market signals.
Broader Market Trends and Expectations
The recent trend reversal in digital asset investment products underscores evolving market expectations. Last week, inflows into digital assets reached $436 million, a sharp contrast to the prolonged period of outflows, which had totaled $1.2 billion. This shift was largely driven by changing expectations surrounding the Federal Reserve’s interest rate policy, particularly the anticipated 50 basis point rate cut.
Bitcoin’s Price Surge Following the Fed's Rate Cut
In this macroeconomic context, Bitcoin's price rose by 3.03% within 24 hours, reaching $62,138 as investors responded to the Fed’s decision to cut rates. The Federal Open Market Committee's (FOMC) rate reduction is seen as a move to stimulate economic growth amid ongoing concerns.
Matt Mena, Cryptocurrency Research Strategist at 21Shares, commented that a 50 basis point rate cut might signal to the market that the economy is slowing, indicating underlying problems not yet fully apparent. This could create short-term instability for both traditional and digital investors, triggering initial volatility. However, Mena noted that, historically, Bitcoin and other digital assets have thrived in low-interest-rate environments.
Mena also highlighted that the Fed's move could signal a return of liquidity to the market, sparking risk sentiment and potentially fueling a strong Bitcoin rally as investors seek higher returns.
Broader Cryptocurrency Market Performance
Alongside Bitcoin, other major cryptocurrencies have posted strong performances. Ether climbed 4.14%, reaching $2,414.60, while Solana jumped 6.21% to $138.96. These gains reflect a broader recovery of risk assets, supported by renewed market optimism following the Fed’s interest rate decision.
Conclusion
While Bitcoin spot ETFs saw short-term outflows, investor interest in Bitcoin remains strong, with significant trading volumes and net inflows signaling confidence in the cryptocurrency’s long-term potential. Ether ETFs, on the other hand, are struggling to retain investor interest, reflecting the market’s cautious stance toward Ether. Overall, the crypto market is benefiting from renewed optimism driven by the Fed’s rate cut, with Bitcoin and other cryptocurrencies poised for potential gains in the weeks ahead.