The Spot Bitcoin ETFs have been facing a decline in demand since the beginning of the month, and this trend was highlighted by significant outflows on April 26. This decrease in demand has had a ripple effect on the broader crypto market, with Bitcoin’s price being impacted by unfavorable market conditions. Farside Investors recently shared on X (formerly Twitter) that the Spot Bitcoin ETFs saw $217 million in net outflows on April 25, marking one of the largest outflows this month. One of the major contributors to these outflows was Grayscale’s Bitcoin Trust (GBTC), which experienced $139.4 million being moved out of the fund.
In addition to Grayscale’s Bitcoin Trust, other funds also saw notable outflows. Ark Invest’s Spot Bitcoin ETF recorded $31.3 million in outflows, while Valkyrie and Bitwise’s ETFs experienced $20 million and $6 million in daily outflows, respectively. A significant development was observed in Fidelity’s Wise Origin Bitcoin Fund (FBTC), which recorded a net daily outflow for the first time since its approval, with $22.6 million exiting the fund on Thursday. Furthermore, BlackRock’s iShares Bitcoin Trust (IBIT) faced a dry spell as it recorded zero inflows for the second consecutive day, marking a setback after a streak of 71 consecutive days of daily inflows prior to April 24.
The outflows from Spot Bitcoin ETFs have prompted fund issuers to engage in sell-offs to meet redemptions, leading to increased selling pressure on Bitcoin. Consequently, the flagship cryptocurrency has witnessed significant price declines, with bears exerting control over the market. Data from Coinglass indicates that more long positions in Bitcoin have been liquidated than short positions in the past 24 hours, further highlighting the negative sentiment surrounding the cryptocurrency.
Market Factors Contributing to Decline
The release of preliminary data on April 25 by the Bureau of Economic Analysis revealing a lower-than-expected annual GDP growth rate of 1.6% for the US in the first quarter has influenced market sentiment. This data has dampened hopes of potential rate cuts in the near future, leading to a temporary drop in Bitcoin’s price below $63,000. Additionally, concerns are growing about the upcoming release of Personal Consumption Expenditures (PCE) inflation data on April 26, which could exceed expectations and reinforce the likelihood of no rate cuts. The stance taken by the Federal Reserve on interest rates can have significant implications for risk assets, including cryptocurrencies, and any hawkish indications could further impact the crypto market negatively.
The decline in demand for Spot Bitcoin ETFs and the subsequent outflows have had a cascading effect on the broader crypto market, particularly on Bitcoin’s price action. Market conditions, economic data releases, and regulatory decisions all play a role in shaping investor sentiment and influencing asset prices. It is important for investors to stay informed and conduct thorough research before making any investment decisions in such a volatile market environment.