Spot Bitcoin exchange-traded funds (ETFs) saw a significant decline in inflows on January 7 as Bitcoin experienced a 5% decrease, influenced by heightened expectations of a more aggressive stance from the Federal Reserve.
Bitcoin, the largest cryptocurrency by market capitalization, briefly surpassed $102,000, igniting optimism among investors looking for a market rally ahead of impending economic developments.
However, this temporary surge was quickly erased, with Bitcoin plummeting 5.7% within a day. The drop was attributed to rising U.S. bond yields and investor hesitancy in anticipation of critical economic indicators—including the Federal Reserve’s meeting minutes and nonfarm payroll data.
The uptick in bond yields has led to growing expectations of a stricter monetary policy from the Federal Reserve, as officials hint at limiting interest rate reductions to just two in 2025, a notable decrease from prior estimates. Investors are keenly awaiting the Fed’s meeting minutes, scheduled for release on January 8, to gain deeper insights into policymakers’ considerations.
Additional pressure on Bitcoin emerged from a Labor Department report showing job vacancies surged to a six-month high, primarily due to increased demand in the services sector.
This preceded the key nonfarm payroll report set for release on Friday. A stronger-than-expected jobs report could reinforce expectations of continued Fed tightening, potentially exacerbating inflationary concerns in a resilient labor market.
Bitcoin ETF Inflows Plummet by 94%
As Bitcoin’s price declined, inflows into the 12 Bitcoin ETFs amounted to only $52.9 million on January 7, a staggering 94% decrease from the $987 million inflows recorded the day prior, reflecting diminished risk appetites amid Fed tightening expectations.
Among these, only BlackRock’s IBIT reported inflows, attracting $596.11 million, which helped mitigate the overall outflows across other Bitcoin ETFs.
ARK and 21Shares’s ARKB experienced the largest outflows of the day, with $212.55 million exiting the fund. Grayscale’s Bitcoin ETFs, namely GBTC and BTC, also contributed to the downward momentum, with outflows of $125.45 million and $113.85 million, respectively.
Fidelity’s FBTC faced an outflow of $86.29 million, while Franklin Templeton’s EZBC saw a smaller outflow of $5.58 million. The remaining Bitcoin ETFs reported no inflows for the day.
On January 7, the total trading volume for these investment products reached $4.62 billion, up from $3.96 billion the previous day.
At the time of reporting, Bitcoin (BTC) was trading at $96,145 per coin.
