Bitcoin price slumps amid major ETF outflows

Brian McGleenon

Bitcoin (BTC-USD) has struggled to maintain a foothold above the $57,000 (£43,350) level, while spot bitcoin exchange-traded funds (ETFs) experienced their largest single-day outflows in four months this week, as investors withdrew funds in response to a broader market decline.

Bitcoin was trading relatively flat on Thursday with a modest gain of 0.4% to $57,154, according to Coingecko data.

Meanwhile, Ethereum (ETH-USD) edged up by 0.7% to $2,412, and Cardano (ADA-USD) rose 0.8% to $0.32 during the same period.

More than $287m was withdrawn from the 11 US-listed bitcoin ETFs on Tuesday, marking the largest outflow since May, according to data from Farside Investors.

The selling continued into Wednesday, with another $37m in net outflows.

Read more: Crypto live prices

These ETFs, which were launched in January after approval from the US Securities and Exchange Commission (SEC), have seen waning investor interest in recent months. Spot bitcoin funds now manage approximately $52.6bn in assets, down $10bn from their peak.

Tuesday marked the heaviest selling day in the US bitcoin ETF market in four months. Fidelity saw the largest withdrawals, with investors offloading over $162m in its FBTC fund. Grayscale followed with $50.4m in outflows, while the Ark 21Shares fund saw $33.6m in redemptions. Bitwise’s BITB fund also saw $25m in outflows.

Read more: What are bitcoin ETNs?

Grayscale’s GBTC fund led outflows on Wednesday with $34.2m in negative flows, while Fidelity saw $7.6m in redemptions.

Bitwise’s BITB fund saw $9.5m in net inflows.

Bitcoin traders are anticipating the impact of a potential rate cut at the US Federal Reserve's next meeting in mid-September.

The CME FedWatch tool shows a 59% likelihood of a 25 basis point cut in September and a 41% chance of a 50 basis point cut.

Fed Funds CME futures are also implying a 49% chance that the central bank will have slashed rates by 75 basis points in total before its November meeting, which will take place two days after the US presidential election.

A lower interest rate environment could make traditional financial assets like bonds and savings accounts less attractive, potentially driving investors to seek higher returns in risk assets like stocks and bitcoin.

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