Spot Bitcoin ETFs Experience Significant Net Inflows Following Fed’s Powell Indication of Rate Cuts
On Friday, exchange-traded funds (ETFs) that invest directly in Bitcoin (BTC-USD) achieved remarkable net inflows totaling $252 million, marking the highest figures observed since July 23. This surge occurred following remarks made by Federal Reserve Chair Jerome Powell, who announced that “the time has come” to commence interest rate reductions. Trading volumes for the eleven spot Bitcoin ETFs soared to $3.12 billion, the most significant level since July 19, according to data provided by SoSoValue.
The iShares Bitcoin Trust (NASDAQ:IBIT) emerged as the frontrunner, recording trading activity of $1.2 billion alongside net inflows of $83 million. Following closely, the Fidelity Wise Origin Bitcoin Fund (BATS:FBTC) secured net inflows of $64 million, while the Bitwise Bitcoin ETF (NYSEARCA:BITB) garnered $42 million. Notably, the Grayscale Bitcoin Trust (NYSEARCA:GBTC) experienced net outflows of $35 million; however, its mini Bitcoin fund (NYSEARCA:BTC) succeeded in attracting $50 million in net inflows.
These robust net inflows reflect market sentiment following Powell’s signals at the Jackson Hole symposium, where he indicated the Federal Reserve’s readiness to ease monetary policy after maintaining borrowing rates at historic highs to control inflation. Following Powell’s comments, the price of Bitcoin (BTC-USD) surged to over $64,000, as traders began factoring in the possibility of a rate cut during the upcoming Federal Reserve meeting scheduled for September 17-18. Although there has been a slight retraction, Bitcoin is currently trading at approximately $63,600 as of Monday morning.
Lowering of interest rates typically facilitates cheaper borrowing costs and may enhance demand for riskier assets, potentially favoring Bitcoin’s price trajectory. In contrast, elevated rates render borrowing more expensive, thereby steering investors towards safer investments such as Treasury bonds and money market funds.
In conclusion, the recent inflows into Bitcoin ETFs, alongside favorable remarks from the Federal Reserve, suggest a potential bullish trend for Bitcoin as market participants position themselves for an anticipated shift in monetary policy.
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