Bitcoin ETFs Bleed Millions for 4th Straight Day as U.S. Stagflation Fears Weigh on BTC and Stocks
Investors have been pulling money out of U.S.-listed spot bitcoin exchange-traded funds (ETFs) for the fourth consecutive trading day, totaling a net outflow of $196 million on Tuesday. The largest share of this outflow came from Fidelity’s FBTC and BlackRock’s IBIT, according to data from SoSoValue.
This four-day streak of outflows, the longest since April, began last Thursday with a loss of $114.83 million, followed by $812.25 million on Friday and $333.19 million on Monday. The recent U.S. ISM Non-Manufacturing or services PMI release has sparked concerns of stagflation, a troubling scenario for risk assets like technology stocks and cryptocurrencies.
Following the release of the services PMI data, U.S. stocks took a hit, with the Nasdaq index dropping 0.7% after a brief gain on Monday. Bitcoin, the leading cryptocurrency, also fell over 1% to $112,650 before rebounding to around $114,000.
The founders of LondonCryptoClub noted the stagflationary trends in the ISM report, highlighting issues like contracting services employment, stagnant new orders, and rising prices. This toxic combination could hinder the Fed’s ability to cut rates to support economic growth.
Market expectations for a Fed rate cut have increased following disappointing nonfarm payrolls data last Friday, indicating weakness in the labor market. Bloomberg reports that options linked to the Secured Overnight Financing Rate suggest the possibility of rate cuts at each of the remaining three Fed meetings this year, potentially totaling 75 basis points in 2025.
LondonCryptoClub predicts that the Fed will likely cut rates in September due to growing risks to growth and employment.
On the other hand, ether ETFs saw a positive trend, attracting $73.22 million in investor funds and breaking a two-day losing streak. This surge in interest may be attributed to the SEC’s guidance on staking activities and token receipt, which clarified that these activities do not constitute securities offerings under certain conditions.
Nate Geraci, president of NovaDius Wealth Management, believes that this guidance has removed the final obstacle for the approval of spot ether ETFs with staking features.
In conclusion, the cryptocurrency market is facing challenges amid economic uncertainties, but there are also opportunities for growth and investment in assets like ether ETFs. Stay tuned for more updates on market trends and regulatory developments.
Read more: Does the Fed Need to Cut Now? Bitcoin Crumbles Back Below $113K After ISM Services PMI
