The Spot Bitcoin ETFs have been experiencing a decline in demand since the beginning of the month, leading to significant outflows on April 26. This downward trend has had cascading effects on the broader crypto market, especially as Bitcoin’s price has been influenced by the unfavorable market conditions. According to Farside Investors, there was a staggering $217 million in net outflows from the Spot Bitcoin ETFs on April 25, marking one of the largest outflows this month. Grayscale’s Bitcoin Trust (GBTC) bore the brunt of these outflows, with investors withdrawing $139.4 million from the fund.
In addition to Grayscale’s Bitcoin Trust, other funds also experienced individual outflows. Ark Invest’s Spot Bitcoin ETF saw $31.3 million in outflows, while Valkyrie and Bitwise’s ETFs recorded $20 million and $6 million in daily outflows, respectively. Notably, Fidelity’s Wise Origin Bitcoin Fund (FBTC) witnessed a net daily outflow for the first time since its approval, with $22.6 million pulled out of the fund on Thursday. Furthermore, BlackRock’s iShares Bitcoin Trust (IBIT) reported zero inflows for the second consecutive day, signaling a disappointing performance after 71 consecutive days of daily inflows prior to April 24.
The outflows from the Spot Bitcoin ETFs have prompted a wave of sell-offs from the fund issuers to meet redemption demands. Consequently, Bitcoin’s price action has been lackluster recently, with the flagship cryptocurrency experiencing notable price declines due to increased selling pressure. This development has firmly placed the bears in control, as evidenced by the liquidation of more Bitcoin longs than shorts in the last 24 hours, according to data from Coinglass.
The release of the initial estimate by the Bureau of Economic Analysis, which showed that the US Gross Domestic Product (GDP) grew at a modest annual rate of 1.6% in the first quarter, fell below expectations. This data report has dampened hopes for rate cuts this year and has had a tangible effect on investor sentiment, leading to a temporary drop in Bitcoin’s price below $63,000 following the report’s publication. Moreover, the forthcoming release of the Personal Consumption Expenditures (PCE) inflation data on April 26 could potentially exceed expectations, further fueling concerns about the unlikelihood of rate cuts this year. Given the significant impact of interest rates on risk assets, including cryptocurrencies, a hawkish stance by the Federal Reserve could have adverse consequences for the crypto market.
The diminishing demand for Spot Bitcoin ETFs, coupled with economic data releases and market sell-offs, has created a challenging environment for Bitcoin and the broader crypto market. Investors must exercise caution and conduct thorough research before making investment decisions, as the landscape continues to evolve rapidly and uncertainties persist.