In Brief
- Spot Bitcoin ETFs recorded inflows of $91.6 million on Wednesday.
- Analysts attribute recent ETF inflows primarily to expectations of imminent Federal Reserve rate cuts.
- While short-term sentiment appears stable post-periodic pullbacks, experts caution against over-optimism.
Federal Reserve Rate Cut Hopes Spark renewed Inflows into Crypto ETFs
Bitcoin Exchange-Traded Funds (ETFs) reversed a four-day exodus of capital on Wednesday, attracting $91.6 million, according to data provider Farside Investors. This marked a resumption of inflows after last week’s significant withdrawals and outflows pointed towards waning investor confidence; however, this reversal signals renewed optimism alongside key macroeconomic shifts.
This week’s CoinShares Digital Asset Fund Flows report initially suggested last week’s drawdowns might have stemmed from the U.S. Federal Reserve’s relatively hawkish post-meeting statements. However, subsequent inflows of $91.6 million into Bitcoin ETFs Wednesday, complemented by $110.4 million into Ethereum ETFs in the preceding two days, signal a decisive shift in investor positioning. Shawn Young, Chief Analyst at MEXC Research, noted that this inflow aligns with sentiment stabilizing “after a volatile stretch,” effectively corroborating the reversal in ETF flows.
Fed rate cut incoming?
The anticipation of a Federal Reserve interest rate cut has significantly intensified following downwardly revised May and June jobs data. Coupled with the recent high-profile dismissal of the U.S. Bureau of Labor Statistics chief by President Donald Trump, the probability of a September rate cut saw a notable increase. Predictive markets from Myriad (an on-chain predictions-tool offered by Decrypt’s parent company) now indicate an 82% chance of a Federal Reserve rate change.
Analysts at Decrypt previously identified the chance of a Fed easing cycle as a primary driver of short-term liquidity into crypto assets, despite underlying macroeconomic headwinds and current perceived fundamentals. The combination highlighted by MEXC’s Young as factors underpinning recent Bitcoin ETF inflows includes “cooling inflation, Bitcoin’s resilience, and key support levels.” Nevertheless, the analysis cautions that while sentiment has lifted, “it’s still too early to call a sustained uptrend.”
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Current Bitcoin trading price, approximately $115,000, reflects a marginal 0.8% daily gain, suggesting relatively stable near-term price action.
