Significant Net Outflows from Bitcoin and Ethereum ETFs Following Fed Rate Cut

Cryptonews John Brightwater September 19, 2024

Significant Net Outflows from Bitcoin and Ethereum ETFs Following Fed Rate Cut

Summary
Despite a 50 basis point rate cut by the Federal Reserve, Bitcoin and Ethereum ETFs faced over $50 million in net outflows. Bitcoin ETFs recorded $52.827 million in outflows, while Ethereum ETFs saw $9.738 million in losses, with some exceptions in performance among specific funds. Optimism exists in the market, influenced by price movements and discussions surrounding institutional adoption of Bitcoin, albeit with caution towards potential future volatility.

In a surprising turn of events, Bitcoin and Ethereum exchange-traded funds (ETFs) have experienced significant net outflows totaling over $50 million despite the announcement of a 50 basis point rate cut by the U.S. Federal Reserve. Following a brief period of inflows, Bitcoin spot ETFs recorded a net outflow of $52.827 million, marking a notable shift in investor sentiment. Grayscale’s Bitcoin ETF, known as GBTC, also faced an outflow of $8.1347 million. Similarly, Ethereum spot ETFs encountered a total net outflow of $9.738 million, with Grayscale’s Ethereum ETF, ETHE, losing $14.6629 million. However, it should be noted that BlackRock’s Ethereum ETF, ETHA, diverged from this trend, showcasing a net inflow of $4.9249 million. QCP Capital commented on the prevailing market conditions, indicating that the Fed’s decision to lower interest rates, which many market participants anticipated, has prompted a shift towards riskier assets, including cryptocurrencies. Despite uncertainty surrounding future rate cuts expressed by Federal Reserve Chairman Jerome Powell, the initial rate adjustment has fostered increased optimism across markets, particularly observable within the U.S. treasury sector. Post-announcement, Bitcoin’s value surged from $59,000 to $62,000, while Ethereum traded around $2,400. Additionally, Greekslive emphasized that the Fed’s cut not only surpassed expectations but also propelled cryptocurrency prices upward, even as U.S. equities lagged. Market observers noted a considerable reduction in investors’ expectations for volatility, suggesting that short-term selling pressure has begun to diminish. Nevertheless, there is a palpable concern that market volatility may escalate again as the Fed deliberates on interest rate adjustments in the upcoming November and December meetings, in conjunction with the approaching U.S. elections. Finally, the role of Bitcoin as an institutional asset will be a topic of in-depth discussion at Benzinga’s forthcoming event, “Future of Digital Assets,” scheduled for November 19.

The recent outflows from Bitcoin and Ethereum ETFs occur against the backdrop of the Federal Reserve’s monetary policy changes, specifically the decision to cut interest rates by 50 basis points. This type of rate adjustment typically aims to stimulate the economy by encouraging investment in riskier assets, including cryptocurrencies. Despite this expectation, the actual movement of capital towards these digital assets has exhibited an unexpected pattern, leading to outflows from long-established funds. Observers attribute this paradox to shifting market sentiments and the complexities surrounding future Federal Reserve policies, especially amid increasing political uncertainties leading up to crucial elections.

In conclusion, Bitcoin and Ethereum ETFs have witnessed considerable outflows, totaling over $50 million, following the Federal Reserve’s recent rate cut. Despite an initial positive reaction in cryptocurrency prices, investor behavior indicates a cautious approach as market volatility remains a concern ahead of upcoming interest rate decisions and elections. The divergence in performance among ETFs illustrates the varied responses within the sector, suggesting that not all funds are equally affected by macroeconomic policies. Insights on Bitcoin’s evolving role as an institutional asset will further be highlighted in Benzinga’s approaching event.

Original Source: www.benzinga.com