Last week witnessed the largest withdrawals from Bitcoin exchange-traded funds (ETFs) since March, indicating a potential massive outflow of capital. The catalyst for this movement was the Federal Reserve’s decision to keep interest rates steady at a range of 5.25% to 5.50%. Market observers expressed concerns, drawing parallels to a similar scenario in August 2022 when Federal Reserve Chair Jerome Powell warned of economic pain due to rate hikes, causing investors to offload risky assets and leading to significant market declines.
CoinShares, a crypto asset management firm, reported that investors reduced their exposure to the market, resulting in $621 million being pulled out of spot Bitcoin ETFs last week in response to the more hawkish stance of the Federal meeting. The withdrawals from Bitcoin ETFs were the largest seen since March, as these assets tend to perform well when interest rates are low. On Thursday, the prices of cryptocurrencies experienced high volatility, with spot Bitcoin ETFs continuing to face withdrawals.
Since mid-March, when Bitcoin reached an all-time high above $74,000 fueled by the launch of new spot ETFs, its price has declined. The recent momentum suggests that bears have taken control in the cryptocurrency market. Coinglass, a crypto monitoring company, has observed withdrawals of approximately $300 million from spot Bitcoin ETFs since the beginning of this week. Investors are pulling back their bets on interest rate reductions from the Federal Reserve, as relatively high bond yields have weighed on cryptocurrency prices and triggered outflows from spot Bitcoin ETFs.
Despite the overall decline, Bitcoin has experienced a slight uptick recently. At the time of writing, Bitcoin is trading at $66,326, representing a 1.43% increase in the last 24 hours according to data from CMC.
In other crypto news, ETHSofia has announced a $10,000 hackathon bounty and an impressive lineup of speakers, further highlighting the ongoing developments in the cryptocurrency space.