Bitcoin ETF Inflows Plummet 68% Amid Fed Rate Decisions and AI Concerns
Inflows into spot Bitcoin ETFs in the U.S. have decreased by 68% this past week, influenced by the Fed’s interest rate decisions and concerns over China’s AI platform Deepseek. Significant initial outflows were reported at $457.48 million as market participants reacted to these developments. Despite brief recoveries, forecasts for 2025 indicate potential growth in Bitcoin ETF investments.
Recently, inflows into spot Bitcoin exchange-traded funds (ETFs) in the United States saw a drastic decline of 68% amid the Federal Reserve’s interest rate decisions and investor concerns related to China’s AI platform, Deepseek. According to SoSoValue, total net inflows for the previous week resulted in approximately $559.84 million, a significant decrease from $1.76 billion recorded the week prior.
The decline commenced from January 27-31, where a notable $457.48 million was withdrawn, linked to the rising awareness of Deepseek, an AI application perceived as competition to ChatGPT, consequently leading to stock price drops and significant crypto liquidations.
Over the next two days, Bitcoin funds experienced modest inflows of $18.44 million and $92.09 million, as market participants remained cautious ahead of the Federal Open Market Committee (FOMC) meeting, which many anticipated would leave interest rates unchanged at 4.25%-4.50%.
Post the January 29th FOMC meeting, Bitcoin ETFs witnessed a remarkable 500% increase in inflows the following day, totaling $588.22 million, led by BlackRock’s IBIT with inflows of $321.5 million. This positive trend persisted on January 31, with an additional $318.56 million entering the funds, predominantly contributed by BlackRock’s IBIT again.
However, some funds encountered withdrawals, with Bitwise’s BITB and Grayscale’s GBTC seeing $56.03 million and $30.59 million withdrawn, respectively. Despite fluctuations, experts like Matt Hougan from Bitwise Asset Management foresee 2025 being a promising year for Bitcoin ETFs, predicting inflows may exceed previous figures.
Mr. Hougan remarked on potential month-to-month volatility but anticipated that total Bitcoin ETF inflows for the year would exceed $50 billion. The market for Bitcoin ETFs is poised for expansion, with several institutions including Wells Fargo and UBS likely to obtain approvals by early 2025.
Bitcoin ETFs allow investors to trade Bitcoin on the stock market without having to manage the underlying asset. Their inflows are influenced by various market factors, including interest rates set by the Federal Reserve and investor sentiment impacted by news events, such as the introduction of competing technologies. Recent developments in AI and market volatility have underscored the susceptibility of these funds to rapid shifts in investor confidence. The performance trends observed indicate potential long-term growth for Bitcoin ETFs despite short-term challenges.
In summary, Bitcoin ETFs have experienced a significant downturn in inflows due to external market pressures and investor uncertainty surrounding emerging AI technology. Although there was a notable recovery in inflows following the Federal Reserve’s decisions, considerable volatility persists. Looking ahead, experts project a bullish outlook for Bitcoin ETFs in 2025, with anticipated expansion and increasing investment activity.
Original Source: crypto.news
Post Comment