Bitcoin exchange-traded funds (ETFs) have experienced a significant outflow of $680 million in a single day, coinciding with a shift in market expectations regarding interest rate cuts by the Federal Reserve. This outflow is the largest recorded since the approval of these investment vehicles in January, indicating a growing sense of caution among investors.
The sell-off has also led to a decline in Bitcoin's price, which fell approximately 5% to around $97,400. This downturn aligns with a general decline in risk assets following the Fed's updated economic projections. Notable Bitcoin ETFs, including Grayscale’s Bitcoin Trust and Bitwise’s Bitcoin ETF, have seen declines of about 8% since the Fed's new guidance. Bitcoin itself has lost around 9% in the same timeframe.
The recent outflows from Bitcoin ETFs broke a streak of 15 consecutive days of inflows, suggesting a shift in sentiment influenced by the Fed's projections and seasonal profit-taking among institutional investors. Analysts predict continued volatility in the cryptocurrency sector, with concerns about short-term downside risks. The current selling pressure could further strain market sentiment and potentially impact the broader cryptocurrency landscape. Some analysts speculate that the sell-off may persist in the near term, with the total market capitalization of cryptocurrencies potentially falling below $3 trillion.
Monitoring economic indicators and central bank policies will be crucial in determining the future trajectory of Bitcoin and other digital assets.