Investors pulled $200 million from U.S. bitcoin ETFs on Tuesday, likely de-risking ahead of key inflation and Fed reports due Wednesday. The outflows, the highest since May 1st, came amid a bitcoin selloff that saw prices briefly dip below $66,200.
Grayscale’s GBTC accounted for $120 million of the redemptions, leading all bitcoin ETFs in outflows. Since its January launch, the underperforming GBTC has seen a staggering $18 billion in total investor exits.
The sell-off and fund outflows suggest trader anxiety over upcoming U.S. CPI data and Federal Reserve monetary policy meeting minutes, which could influence the path of interest rate hikes.
A slew of bitcoin exchange-traded funds saw significant outflows on Tuesday, totaling around $200 million in net redemptions as traders likely reduced risk exposures ahead of key economic reports due Wednesday. Ark Invest’s ARKB, Bitwise’s BITB, Fidelity’s FBTC, and VanEck’s HODL recorded outflows ranging from $56 million down to $7 million. None of the bitcoin ETFs tracked saw any inflows.
Market participants suggest the fund exits were a defensive move by traders positioning ahead of the U.S. Consumer Price Index data release and the conclusion of the Federal Reserve’s two-day policy meeting. The Fed is expected to provide updated economic projections and an interest rate decision that could further shape the trajectory of upcoming rate hikes.
“Markets are in risk-off mode ahead of CPI and FOMC tomorrow. This month’s FOMC will also release the Dot Plot, which informs the market how many cuts the Fed anticipates for the rest of 2024,” crypto trading firm QCP Capital said, while maintaining a bullish long-term stance.
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The outflows came amid a bitcoin sell-off that briefly sent prices tumbling below $66,200 before a rebound. Grayscale’s GBTC product saw the largest exit at $120 million, adding to its run as the worst-performing bitcoin ETF with $18 billion in cumulative outflows since its January launch.
Traders are also bracing for potential volatility around Treasury Secretary Janet Yellen’s speech on Friday regarding digital assets, which could impact the crypto markets based on her comments.
Despite the near-term headwinds, QCP remained upbeat, stating: “We think this might be a good opportunity to accumulate coin. Bullish events on the horizon, such as the eventual ETH spot ETF going live along with Biden and Trump in a verbal arms race to win the crypto vote.”
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