In the latest twist, two Bitcoin and Ethereum exchange-traded funds (ETFs) in the US have reported outflows of cryptocurrencies for the second day in a row, pointing to early signs of crypto investors’ prudence. This comes after market fluctuations and a lot of ambiguity regarding the policy expected to be made by the Federal Reserve.
As reported by SoSoValue, outflows from both Bitcoin and Ethereum ETFs occurred on September 4. The crypto market, which has been experiencing recent volatility, may encounter fresh problems as outflows continue in the two largest cryptocurrencies by market capitalization.
A Sharp Decline in Bitcoin ETF Flows
Spot Bitcoin ETFs experienced net redemptions of $37.29 million on September 4, which reflects negative flows for the sixth consecutive day. Although this is a decline, it is significantly lower than the $287 million outflows dropped to 78 million per day observed during the previous day and represents the highest since May 1.
These outflows were led by Grayscale’s Bitcoin Trust (GBTC), worth $34.2 million, taking their total outflow from the fund to $19.93 billion to date. High-profile selling in GBTC proves that the problem is more extensive as more investors seek to invest in safer assets, especially in macroeconomic turbulence. Also, Fidelity’s FBTC and VanEck’s HODL funds witnessed an outflow of $7.6 million and $4.9 million, respectively. The only news that brought a glimmer of hope into the Bitcoin ETF niche came from Bitwise’s Bitcoin Fund (BITB), which registered a tiny $9.5 million inflow on the same day, although this is complemented by a general downward trend.
There were also no major inflows or outflows for BlackRock’s identically named institutional buyer, the biggest spot Bitcoin fund, IBIT. “The recent redemptions are triggered by inflation and a fluctuating economic environment globally,” pointed out Marc Robinson from SoSoValue. He also noted that, as for short-term perspectives, they lack certainty, but with the addition of multiple cryptocurrencies, Bitcoin ETF’s long-term perspectives are viewed as positive.
Ether ETFs Follow the Same Path
Spot Ethereum ETFs also displayed bearish actions, showing joint net outflows of $37.51 million on September 4. Just as Grayscale’s Ethereum Trust (ETHE) claimed $40.6 million in outflows, the trend was negative once again. However, Grayscale’s Ethereum Mini Trust posted a $3.1 million inflow, while the rest of the Ether ETF market remained flat.
The trading volume of the nine Ether ETFs shrunk to $145,861,3747 thousand on September 4, which declined from $162.5 million the previous day, suggesting a slowing down of demand for the active altcoin. As of the time of writing, the Ethereum value has gone up by 1.4% to $2,403, trading on news sources. Ether remains highly sensitive to changes in the Bitcoin market, and the same trend is visible in its market.
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According to many analysts, both leading cryptocurrencies have been experiencing difficulties in the short term due to reasons such as possible changes in interest rates by the Federal Reserve, and fears of a recession. “Ethereum has also mimicked Bitcoin’s performance in the past months, with investors keenly observing any positive signals of relief,” said Alison Clarke from Crypto Insights.
Market Outlook Remains Cautious
The combined net flows in Spot Bitcoin and Ethereum ETFs suggest that investors are becoming more risk-averse. Although Bitcoin and Ethereum are currently experiencing a slight increase in price, the total market is still feeling the effects of the global economic crisis. Experts have pointed out that Bitcoin could be more exposed to further decline in the coming weeks if a recession occurs, with the Bitcoin price potentially dropping by 15%-20%.
Meanwhile, ahead of the upcoming Federal Reserve policy meeting, investors are awaiting potential changes in interest rates. If the expected rate cuts coincide with a deterioration of recessionary sentiments in the market, it could lead to a drastic market adjustment, potentially bringing Bitcoin down to the $40-50k region, according to analysts at Bitfinex.
However, some investors believe that this period of outflows will be only a temporary event and that the crypto market will continue to grow. Notably, the rejuvenation of funds such as BITB from Bitwise indicates that there is still demand for this segment, especially from a long-term perspective.
Conclusion: Uncertainty Clouds the Crypto Market
Two consecutive days of joint outflow of Spot Bitcoin and Ethereum ETF demonstrate investors’ worries with an unstable macroeconomic background. However, some positive signals can be seen in the inflows of some of the small funds While markets remain fearful for both Bitcoin and Ethereum major downside risks are present.
Currently the market is holding its breath waiting for policy decisions from the Federal Reserve that may set the pace for both leading cryptocurrencies. Well, for now at least, investors are keeping their powder dry, and sitting back, watching how the general macro economy affects the crypto sphere. Keep following TheBITJournal for latest crypto updates and developments ON Bitcoin and Ethereum.
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