On January 7th, there was a significant decrease in investments into Bitcoin-related exchange-traded funds due to a 5% fall in Bitcoin’s value. This decline was likely influenced by heightened anticipation that the Federal Reserve might adopt a stricter monetary policy.
Yesterday, the globally recognized digital currency, Bitcoin, soared beyond $102,000, igniting enthusiasm among investors who are hopeful for a market surge in the run-up to President-elect Donald Trump’s inauguration, fueling renewed optimism.
Initially, there was an increase in Bitcoin’s value, but this rise didn’t last long as it fell by 5.7% within a day. This decline was likely due to the surge in U.S. bond yields and investors’ apprehension about forthcoming economic reports such as the Federal Reserve’s meeting minutes and nonfarm payroll data, which might have had an impact on the market.
The rise in bond yields has caused investors to believe that the Federal Reserve might adopt a tougher approach. Previously, it was expected that there would be multiple interest rate cuts in 2025, but now officials have only signaled two. Investors are eagerly waiting for the Fed’s meeting minutes, due to be released on January 8, for further insight into the discussions among policymakers.
Increased strain on Bitcoin was observed following the release of a report by the U.S. Labor Department, which showed job openings reached their highest level in six months. This rise was primarily fueled by increasing demands within the services sector.
Coming up on Friday is an important jobs report that isn’t farm-related. If the data shows more job growth than anticipated, it might strengthen the belief that the Federal Reserve will maintain their tight monetary policy for a longer period. A robust labor market could persistently contribute to rising inflation rates.
Bitcoin ETF inflows plunge by 94%
On January 7th, I noticed a significant decrease in Bitcoin ETF investments as the falling Bitcoin price took hold. This dip in investment was due to a hawkish stance from the Federal Reserve that seemed to dampen the risk-taking spirit among investors. Remarkably, the inflows for the 12 Bitcoin ETFs amounted to only $52.9 million – a stark contrast and 94% drop compared to the impressive $987 million inflows the day prior.
Based on information provided by SoSoValue, BlackRock’s IBIT was the sole Bitcoin ETF that saw investments flow in on Tuesday. BlackRock managed to counterbalance the total withdrawals from other Bitcoin ETFs with an inflow of approximately $596.11 million into its spot Bitcoin ETF.
Today saw significant withdrawals from ARK and 21Shares’s ARKB fund, totaling approximately $212.55 million. Similarly, Grayscale’s GBTC and BTC ETFs experienced outflows of $125.45 million and $113.85 million each, adding to the overall downward trend.
On that particular day, Fidelity’s FBTC experienced an outflow of approximately $86.29 million, while Franklin Templeton’s EZBC reported a more moderate outflow of around $5.58 million. Notably, other Bitcoin ETFs reported no inflows or outflows that day.
On January 7th, the daily trading volume for these investment products reached $4.62 billion, marking an increase compared to the $3.96 billion traded the previous day.
AT press time Bitcoin (BTC) was exchanging hands at $96,145 per coin.
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2025-01-08 10:46