Key Points
- Spot Bitcoin ETFs saw $200 million in outflows amid inflation fears.
- The Grayscale Bitcoin Trust and ARK 21Shares Bitcoin ETF experienced the largest withdrawals.
- Market volatility increased ahead of the US CPI report, with mixed economic signals adding to uncertainty.
- Investors are split on CPI expectations, with potential impacts on Bitcoin’s future trajectory.
Spot Bitcoin exchange-traded funds (ETFs) have experienced significant outflows, totaling over $200 million, as the market braces for the US Consumer Price Index (CPI) report. Here’s a breakdown of the latest developments and what they mean for Bitcoin and the broader market.
Significant Outflows Amid Inflation Fears
On June 11, 2024, US spot Bitcoin ETFs recorded a daily net outflow of $200.31 million, according to SoSo Value data. The Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB) were hit the hardest, with outflows of $121 million and $56 million, respectively. In contrast, BlackRock’s iShares Bitcoin Trust (IBIT) saw no inflows or outflows during the same period.
This marks a shift from the positive inflows seen since May 13, highlighting growing caution among investors as they anticipate the release of the May US CPI data. Jesse Cohen, a Global Markets Analyst at Investing.com, noted that the market’s volatility is heightened ahead of the report. He commented, “A cooler-than-expected CPI could extend the market rally, boosting hopes for Fed rate cuts. Conversely, a stronger-than-expected reading could increase market volatility, delaying rate cuts and raising inflation concerns.”
#Bitcoin ETFs
-$200M net outflows yesterday pic.twitter.com/w00GAooVJo
— Dr. Johannes Reeg (@johannesreeg) June 12, 2024
Market Sentiment and Economic Indicators
The Kobeissi Letter highlighted the divided expectations surrounding the CPI data, noting that while major banks predict a 3.4% CPI inflation rate, prediction markets indicate a 17% chance of inflation exceeding 3.4% and a 41% chance of it falling below 3.4%. This uncertainty is compounded by mixed economic indicators: US firms added 272,000 jobs in May, wages rose by 4.1% annually, and the unemployment rate increased to 4%.
Matthew Dixon, CEO of Evai, emphasized the critical nature of the CPI report and the Federal Reserve’s stance. He remarked, “Higher inflation would benefit the dollar but hurt risk assets like Bitcoin. Conversely, a subdued CPI could lead to a dovish Fed, boosting risk assets.” Dixon also noted Bitcoin’s historical trend of rebounding after FOMC announcements, despite initial volatility.
US Bitcoin ETFs see $200M outflows before FOMC meeting. pic.twitter.com/d0fKnKXEdt
— Crypto Crib (@Crypto_Crib_) June 12, 2024
Bitcoin’s Price Outlook
The recent outflows and market sentiment reflect a cautious approach from investors. Bitcoin’s price has shown resilience in the face of Fed announcements, often rebounding after initial drops. Researcher Gumshoe highlighted this pattern, noting, “BTC typically drops 10% before FOMC meetings and recovers by the end of the day.”
The upcoming CPI report and the Federal Reserve’s actions will likely shape the market’s direction. Investors are closely watching these developments, with expectations that the CPI data could either reinforce or undermine confidence in risk assets, including Bitcoin.
