Markets
Inflation fears in the US generate $200 million outflows from Bitcoin ETFs
Spot Bitcoin (BTC) exchange-traded funds (ETFs) have seen significant daily outflows of over $200 million due to uncertainty surrounding the U.S. inflation data dominated the market.
Investors are reevaluating their positions in risky assets, including Bitcoin ETFs, as inflation fears grow. These developments highlight the intricate relationship between macroeconomic indicators and the crypto market.
Market Anticipation Drives Bitcoin ETF Liquidation
SoSo value data shows US spot Bitcoin ETFs saw daily net outflow of US$200.31 million on June 11. The Grayscale Bitcoin Trust (GBTC) and the ARK 21Shares Bitcoin ETF (ARKB) were the hardest hit, with outflows of $121 million and $56 million, respectively. Meanwhile, BlackRock’s iShares Bitcoin Trust (IBIT) recorded no inflows during the same period.
See more information: How to protect yourself from inflation using cryptocurrency
Historical spot Bitcoin ETF flows data. Source: More or less value
This change is notable as these ETFs have seen positive inflows since May 13th. However, outflows began to occur from June 10th as market participants brought forward the release of May US Consumer Price Index (CPI) data today.
Jesse Cohen, global markets analyst at Investing.com, highlighted the market rise volatility around the next IPC report. He indicated that a colder than expected CPI report could prolong the ongoing market recovery. He reassures investors about possible Fed rate cuts in the coming months.
“However, a surprisingly strong inflation reading could trigger market volatility as it could delay expectations of a rate cut and raise concerns about inflationary pressures,” he said. added.
The research company The Kobeissi Letter also weighed in. She noted divided expectations regarding the CPI data. The company highlighted that while major banks expect CPI inflation to reach 3.4%, forecast markets indicate a 17% probability of inflation above 3.4% and a 41% probability below 3.4%.
“Inflation measured by CPI above 3.4% [today] would mean that inflation has increased 3 of the last 4 months”, The Kobeissi Letter he wrote.
Mixed economic signals further complicate the outlook for inflation and market performance. For example, US companies added 272,000 jobs in May and wages increased at an annual rate of 4.1%, while the unemployment rate rose to 4%. This paradox of rising employment and wages, together with rising unemployment, increases economic uncertainty.
Matthew Dixon, CEO of crypto ratings platform Evai, highlighted the critical nature of the upcoming CPI and Federal Reserve meeting. He acknowledged the genuine risk of higher inflation, which would be positive for the dollar but negative for risk assets including Bitcoin.
“It is also possible that we will see CPI decline and Fed policy, resulting in a boost to risky assets,” he said. he said.
However, Bitcoin price historically tends to recover following the FOMC announcements, despite initial volatility. Pseudonymous crypto researcher Gumshoe noted this in his recent analysis.
“There were 4 FOMC [meetings] in 2024. […] BTC was down 10% in the 48 hours before all of them. On FOMC day, it recovered all movement. The market always prices overly pessimistic statements and then reverses it,” Gumshoe highlighted.
See more information: Bitcoin (BTC) Price Prediction 2024/2025/2030
As the market prepares for imminent inflation data, one-off Bitcoin ETF exits show a cautious sentiment among investors. The outcome of the US CPI report and subsequent actions by the Federal Reserve will likely set the tone for market movements in the near term.
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