Cryptocurrency-based Exchange Traded Funds (ETFs) See an End to Their Seven-Day Loss Streak During a 'Positive' Rebalancing Phase

Cryptocurrency-based Exchange Traded Funds (ETFs) See an End to Their Seven-Day Loss Streak During a 'Positive' Rebalancing Phase

In a surprising turn of events, spot Bitcoin ETFs experienced a net outflow of $51.3 million on Wednesday, ending a seven-day streak of inflows. This shift in investment trends comes after the Federal Reserve's rate cut, as attention turned to the Bitcoin price and the stock market today, particularly the DJIA. The Fed's move to inject liquidity into the market seems to have pushed investors to seek assets with stronger return potential. Farzam Ehsani, co-founder and CEO of crypto exchange VALR, believes Bitcoin naturally stands out in this environment. Fidelity's Wise Origin fund, which had been gaining momentum, shed $116 million on Wednesday, erasing much of its earlier gains. Grayscale's Bitcoin Trust also recorded a $62.6 million outflow on the same day. However, other players in the market, such as Ark 21Shares and Bitwise, saw smaller gains in allocations during the week. Despite the recent outflows, Ehsani maintains a bullish outlook, viewing the pause in inflows as healthy short-term rebalancing rather than a change in sentiment. He believes the inflows seen are likely just the beginning, and the current cycle is more bullish due to crypto infrastructure showing it is 'ready to absorb and channel that capital,' referring to institutional demand. The institution with the greatest influence on the Bitcoin ETF market during the week of November 11 to 17, 2023, appears to be U.S.-based spot BTC ETFs. These ETFs recorded inflows exceeding $3 billion and showed strong institutional demand, significantly impacting the market dynamics in that period. BlackRock's iShares Bitcoin Trust received more than $1 billion in allocations during the week, and Fidelity's Wise Origin fund received $850 million in allocations. The demand for regulated exposure via ETFs continues to grow, indicating a steady build-up of institutional investments in cryptocurrencies. Ethereum, meanwhile, is currently trading around $4,600, up 2.8% on the day. Bitcoin's response to the Fed rate cut was muted, with the cryptocurrency trading at around $117,750, up 1.7% on the day according to CoinGecko data. As the market catches its breath after more than $2.3 billion pouring in over just a week, Ehsani remains optimistic about the future of cryptocurrencies. To stay updated on the latest news and trends in the cryptocurrency market, subscribe to The Daily Debrief Newsletter, available on Walrus. The combination of accommodative macro conditions and crypto's fresh maturity makes this moment promising, according to Ehsani.

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