According to Bloomberg: US Bitcoin exchange-traded funds (ETFs) have experienced their longest run of daily net outflows since their launch earlier this year. Investors withdrew nearly $1.2 billion from the 12 Bitcoin ETFs over the eight days leading up to Sept. 6. This decline is part of a broader retreat from riskier assets as global markets face economic uncertainty.
Factors Driving the Outflows
The challenging market environment, fueled by mixed US jobs data and deflationary pressure in China, is having a significant impact on traders. As the short-term correlation between stocks and cryptocurrencies strengthens, Bitcoin's price movements have become more closely aligned with fluctuations in equity markets.
Bitcoin has struggled in September, losing around 7%, although the digital asset saw a modest 1% increase to $54,870 by Monday afternoon in Singapore. Sean McNulty, director of trading at Arbelos Markets, noted that the recent uptick may be partially attributed to prominent influencers closing their short positions, citing BitMEX co-founder Arthur Hayes as an example.
Political and Economic Impact
The political climate is also influencing market sentiment. An improved showing by pro-crypto Republican presidential nominee Donald Trump in polls and prediction markets could be contributing to Bitcoin's small relief rally. McNulty reported increased demand for options hedges ahead of Tuesday’s debate between Trump and Democratic nominee Vice President Kamala Harris, who has yet to clarify her stance on cryptocurrencies.
The original US Bitcoin ETFs debuted in January 2024 with strong demand, driving Bitcoin to a record high of $73,798 in March. However, inflows have since slowed, and Bitcoin’s year-to-date rally now stands at around 30%.
Looking Ahead
Caroline Mauron, co-founder of Orbit Markets, a digital-asset derivatives liquidity provider, expects Bitcoin to remain in the $53,000 to $57,000 range until the US releases consumer price data on Wednesday. The upcoming inflation figures are likely to shape expectations for the Federal Reserve's anticipated monetary easing in the US.
As the global economic outlook remains uncertain, Bitcoin and its associated ETFs continue to face significant volatility, with traders keeping a close eye on macroeconomic indicators and political developments.
