U.S. Bitcoin ETFs Lose Record $563M Despite Powell Ruling Out Rate Hike by the Fed


On Wednesday, investors dumped Fidelity’s FBTC tokens instead of GBTC, which might be a worrying sign for bulls.

Despite Federal Reserve (Fed) chairman Jerome Powell ruling out the possibility of a rate rise, investors sold U.S.-based spot bitcoin (BTC) exchange-traded funds (ETFs) at a record pace on Wednesday.

Data from Farside Investors and CoinGlass indicate that eleven exchange-traded funds (ETFs) had a net withdrawal of $563.7 million, the biggest since the funds started trading on January 11, prolonging a losing run of five days. Ever since April 24th, investors have withdrawn roughly $1.2 billion from the ETFs.

On Wednesday, investors pulled $191.1 out of Fidelity’s FBTC, leading to outflows. Even though the comparatively expensive Grayscale ETF (GBTC) had frequent substantial withdrawals of capital in the first quarter, FBTC and BlackRock’s IBIT continued to collect money, which may have alarmed bulls.

Following ARKB with $98.1 million and IBIT with $36.9 million, GBTC had the second-largest outflow on Wednesday, totalling $167.4 million. Despite Powell’s net-dovish stance of providing support for risky assets like bitcoin, other funds also lost money. When the central bank prioritises job creation and economic development above a drastic reduction in lending, they are taking a dovish approach.

As anticipated, the Federal Reserve left the benchmark interest rate steady between 5.25 and 5.25 percent on Wednesday. At the press conference, Powell pushed back against concerns about potential rate rises or liquidity tightening caused by recent dismal inflation numbers by saying the economy is too robust to lower rates.

In addition, beginning in June, the Federal Reserve will drastically reduce its alternative liquidity tightening programme, often known as quantitative tightening (QT). At the same time, in an effort to increase bond market liquidity, the United States Treasury launched a programme to repurchase billions of dollars’ worth of government debt, the first such programme in more than twenty years.

Bitcoin, like other risk assets, is vulnerable to changes in liquidity expectations; after Powell’s remarks, the price briefly rallied from $56,620 to $59,430. Treasury note yields, both 10- and 2-year, declined in tandem with the dollar index.

At the time of writing, bitcoin has dropped back below $57,300, indicating that the upswing was temporary. Disappointing volumes at the launch of Asia’s first spot bitcoin and ether (ETH) ETFs in Hong Kong earlier this week only served to dampen spirits in the crypto market.

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