U.S. Spot Bitcoin ETFs Experience Record Outflows

On June 11, U.S. spot Bitcoin ETFs witnessed a dramatic $200 million in net outflows, marking the most significant single-day loss since May 1, when outflows reached $564 million. This sharp decline in investor interest primarily affected the Grayscale Bitcoin Trust (GBTC), which saw the highest net outflows of $121 million, and the Ark Invest and 21Shares’s ETF ARKB, which recorded outflows of $56 million.

The recent outflows from GBTC not only surpassed its prior records—exceeding $113 million across three consecutive days—but also increased by approximately $8 million on June 11 alone. This shift indicates a growing caution among investors, particularly as significant market events loom on the horizon.

Currently, Bitcoin is priced at $67,449, having dipped to a low of $66,207 over the last 24 hours, according to CoinGecko. This price fluctuation triggered the liquidation of about $245 million worth of long Bitcoin contracts.

Investor sentiment is largely influenced by the anticipation of the upcoming Federal Open Markets Committee (FOMC) meeting, chaired by Jerome Powell. Market participants are not expecting changes in interest rates, with a staggering 99.4% predicting that rates will remain steady between 525-550 basis points, as per the CME FedWatch Tool.

Despite the likelihood of steady rates, Powell’s commentary following the FOMC meeting is expected to significantly sway market reactions. A dovish stance could boost risk asset prices, whereas a hawkish tone might further undermine investor confidence.

Adding to the market’s unease is the impending U.S. Consumer Price Index (CPI) report, set to be released later today. Investors fear that a higher-than-expected CPI could postpone any potential cuts in interest rates. The FOMC has emphasized its focus on the core CPI, which was last reported at 3.4% in April—indicating a slowdown in inflation, yet still considerably above the Fed’s 2% target.

Last month, CoinShares released a report suggesting that Bitcoin’s price actions are heavily influenced by the Federal Reserve’s decisions, reinforcing the critical role of central bank policies on cryptocurrency markets.

There is a growing chorus among stakeholders, including political figures, for the Fed to lower interest rates. Notably, U.S. Senator Elizabeth Warren, known for her critical stance on cryptocurrencies, has unexpectedly aligned with this view. Together with Senators Jacky Rosen and John Hickenlooper, Warren has written to Powell urging a rate cut, arguing that high interest rates are exacerbating inflationary pressures on housing and auto insurance costs, thereby threatening economic stability and increasing the risk of a recession.

This confluence of economic data, central bank policy, and political advocacy highlights the complex interplay of factors currently shaping the investment landscape for Bitcoin and other cryptocurrencies.