BTC Spot ETF Market Dries Up as Fed Rate Cut Hopes Fade

In the week ending April 26, the BTC-spot ETF market experienced its third consecutive week of net outflows, amounting to $328 million. Despite the recent Bitcoin Halving, these outflows align with diminishing expectations of a Fed interest rate cut in September. The total April outflows currently stand at $130.8 million, raising the possibility of the first monthly net outflows since the market's launch in January. With key events such as the FOMC press conference and the launch of Hong Kong BTC and ETH-spot ETFs approaching, investor attention to the BTC-spot ETF market's flow trends is expected to heighten.

BTC Spot ETF Market Experiences Persistent Outflows Amid Fed Rate Cut Concerns

In a significant turn of events, the Bitcoin (BTC) spot exchange-traded fund (ETF) market has recorded net outflows for the third consecutive week ending April 26. This trend coincides with waning expectations of a Federal Reserve interest rate cut in September.

Despite the highly anticipated Bitcoin Halving on April 20, the BTC spot ETF market has continued to grapple with outflows. Farside Investors reports a total of $328.0 million in net outflows for the week ending April 26.

As April draws to a close, with just two trading sessions remaining, the BTC spot ETF market has already registered net outflows of $130.8 million. If demand remains subdued, this could mark the first instance of monthly net outflows since the launch of these ETFs on January 11.

This week is particularly crucial for investors monitoring flow trends in the BTC spot ETF market. Two key events will shape market sentiment: the release of US labor market data and the Federal Reserve's highly anticipated press conference on Wednesday, May 1. The markets will scrutinize the Federal Open Market Committee's (FOMC) guidance for clues about the possibility of multiple rate cuts in 2024.

Beyond the US market, the launch of Hong Kong Bitcoin and Ethereum spot ETFs on April 30 could provide a counterbalance to the recent outflow trend. Inflow activity in these new ETFs has the potential to offset the impact of outflows in the US market.

Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, expressed his optimism regarding the Hong Kong crypto-spot ETF market:

"We're pretty excited about the Hong Kong ETFs. We think it's going to be a game-changer because it's a new market... We think they're going to get a lot of the Chinese money, Singapore money, all of that Asia money."

However, Balchunas cautioned that the success of these ETFs hinges on the regulatory landscape and the ability of asset managers to secure custody agreements amid ongoing concerns about crypto market volatility.