Bitcoin exchange-traded funds saw a sharp drop in inflows on January 7 as Bitcoin fell 5%, driven by rising expectations of a more aggressive approach from the Federal Reserve.
Bitcoin, the world’s largest cryptocurrency, rose above $102,000 yesterday, sparking renewed optimism among investors anticipating a market rally ahead of President-elect Donald Trump’s upcoming inauguration.
However, the gains were short-lived as Bitcoin fell 5.7% in 24 hours, pressured by rising US bond yields and investor caution ahead of major economic updates, including the minutes of Federal Reserve meetings and not -agricultural wage data.
The rise in bond yields has fueled expectations of a more aggressive stance from the Federal Reserve. Officials have already signaled plans for just two rate cuts in 2025, fewer than previously expected. Investors are now awaiting the minutes of the Fed meeting, which will be released on Wednesday, January 8, for more clarity on policymakers’ deliberations.
Further pressure on Bitcoin came from a US Labor Department report showing job openings rose to their highest level in six months, driven by growing demand in the services sector.
It precedes the crucial non-farm payrolls report scheduled for Friday. A stronger-than-expected jobs report could reinforce expectations of prolonged Fed tightening, as a resilient labor market could continue to fuel inflationary pressures.
Bitcoin ETF Inflows Drop 94%
The falling Bitcoin price resulted in inflows of just $52.9 million across the 12 Bitcoin ETFs on January 7, as expectations of an aggressive stance from the Federal Reserve dampened investors’ sense of risk. Notably, this figure represents a 94% decline compared to the $987 million inflow recorded the day before.
According to facts of SoSoValue, BlackRock’s IBIT was the only BTC ETF to record inflows on Tuesday. The asset manager’s spot Bitcoin ETF attracted $596.11 million in inflows, offsetting the collective outflows of the other BTC ETFs.
ARK and 21Shares’ ARKB recorded the highest outflows of the day, with $212.55 million disappearing from the fund. Grayscale’s two Bitcoin ETFs, GBTC and BTC, also contributed to the negative momentum with outflows of $125.45 million and $113.85 million, respectively.
Fidelity’s FBTC reported outflows of $86.29 million, while Franklin Templeton’s EZBC saw a more modest outflow of $5.58 million. The remaining BTC ETF saw “0” flows that day.
Meanwhile, daily trading volume for these investment products reached $4.62 billion on January 7, a jump from $3.96 billion a day earlier.
At the time of writing, Bitcoin (BTC) was exchanging hands for $96,145 per coin.
