02 May

On Wednesday, investors sold out U.S.-based spot bitcoin (BTC) exchange-traded funds (ETFs) at the fastest rate possible, despite Jerome Powell, the head of the Federal Reserve (Fed), discounting the likelihood of a rate hike.

According to data sources Farside Investors and CoinGlass, the 11 ETFs had a collective net outflow of $563.7 million, the biggest since the funds started trading on January 11. This continued a five-day losing trend. Since April 24, investors have taken out around $1.2 billion from the ETFs.

With $191.1 in withdrawals on Wednesday, Fidelity's FBTC led the outflows. Bulls may find this concerning because in the first quarter, FBTC and BlackRock's IBIT drew in enormous amounts of money, more than offsetting the frequent, significant withdrawals from the comparatively expensive Grayscale ETF (GBTC).

The second-biggest withdrawal on Wednesday was $167.4 million from GBTC, trailed by $98.1 million from ARKB and $36.9 million from IBIT. Even though Powell's net-dovish stance put a floor under risk assets, including bitcoin, other funds also lost money. A dovish attitude is one in which the central bank favors economic expansion and employment over an overabundance of tightening liquidity.

As anticipated, the Federal Reserve held the benchmark interest rate between 5.25% and 5.5% on Wednesday. Powell pushed back against concerns of more rate hikes or restricting liquidity at the news conference, citing the strength of the economy as justification for not cutting rates. These concerns were stoked by recent, dismal inflation data.

Additionally, the Fed said that, as of June, it will drastically reduce the scope of its alternative liquidity tightening program, known as quantitative tightening (QT). In the meantime, the U.S. To increase bond market liquidity, Treasury revealed a plan to repurchase billions of dollars' worth of public debt for the first time in more over 20 years.

Similar to other high-risk assets, bitcoin is susceptible to anticipated shifts in liquidity conditions. In the wake of Powell's remarks, the cryptocurrency saw a temporary increase, rising from $56,620 to $59,430. Along with the dollar index, the yield on the 10- and two-year Treasury notes decreased.

The rise in bitcoin, though, was fleeting as it returned to $57,300 at the time of writing. The atmosphere was worsened earlier this week when Hong Kong saw the debut of Asia's first spot bitcoin and ether (ETH) ETFs, with underwhelming volumes. 

May 2024, Cryptoniteuae

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