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  • Bitcoin ETFs saw their first net inflows in a week, boosting Bitcoin’s price as institutional interest rises.
  • GBTC experienced significant outflows, but the pace has slowed by 70% over the past week.

Bitcoin Exchange-Traded Funds (ETFs) saw their first net inflows in a week, significantly contributing to a surge in Bitcoin’s price. The influx of institutional interest in these regulated financial products comes at a time when investors are closely monitoring the Federal Reserve’s impending decision on interest rates and its potential impact on various asset classes, including digital currencies.

After a week of continuous net outflows, Bitcoin ETF issuers collectively added more than 4,200 Bitcoin, valued at approximately $183 million, to their holdings in a single day. This sudden influx of funds resulted in Bitcoin reaching its highest price since the commencement of ETF trading. To put this into perspective, from January 23 to January 26, around 20,000 Bitcoins left these ETFs, with the last net inflow recorded on January 22, when 1,200 Bitcoins were added.

Grayscale Bitcoin Trust (GBTC), a prominent player in the cryptocurrency market, witnessed net outflows of $192 million on January 29, 2024. Despite these significant outflows, GBTC’s holdings still account for 496,573.8166 Bitcoins, with assets under management (AUM) hovering around $21.431 billion. Notably, the past week saw a substantial 70% drop in GBTC outflows compared to the previous week’s $641 million. Additionally, the outflows on January 29 represent a nearly 25% decrease from the $255 million recorded on January 26.

 

On the same day, GBTC experienced outflows, and Fidelity’s spot Bitcoin ETF attracted net inflows of $208 million. This influx of capital into Fidelity’s offering outpaced the outflows from GBTC, demonstrating a shift in investor sentiment towards ETFs as a regulated investment vehicle for Bitcoin exposure.

ETF Trading Volumes Surge

January 29, 2024, also significantly increased trading volumes for Bitcoin ETFs. The combined trading volume for the nine new US spot Bitcoin ETFs reached an impressive $994.1 million, nearly doubling that of GBTC, which recorded a volume of $570 million. While preliminary trading data suggested that iShares Bitcoin Trust (IBIT) surpassed GBTC in trading volume, by day’s end, GBTC still held the liquidity crown.

 

The sustained interest in Bitcoin ETFs reflects a broader trend of institutional investors preferring regulated financial products over traditional cryptocurrency trading platforms. This shift indicates a growing recognition of the legitimacy and reliability of ETFs as a means to gain exposure to the cryptocurrency market.

The surge in ETF inflows coincides with the anticipation of the Federal Reserve’s upcoming decision on interest rates, a crucial event that could impact liquidity and investment strategies across various asset classes, including digital currencies. Investors are closely monitoring the central bank’s actions and any hints of a dovish or hawkish stance on inflation.

Analyst Predictions and Market Sentiment

Prominent crypto analyst Michael van de Poppe has weighed in on the current situation. He anticipates that Bitcoin’s price could reach $50,000 before the scheduled Bitcoin halving in April 2024. Van de Poppe points out that Bitcoin is consolidating around $43,000 after a correction to $38.5K. He believes that Bitcoin’s outperformance is likely to be accompanied by gains in altcoins and emphasizes that the approval of ETFs holds more significance than may initially meet the eye.

 

From a technical analysis perspective, Bitcoin faces immediate resistance near $42,286 and $44,000. If these hurdles are surpassed, it could pave the way for bullish sentiment, potentially pushing prices toward the $48,000 resistance zone. Bitcoin (BTC) has re-entered the market with a 1.0% gain within the past day, pushing its value to $42,589.


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