Bitcoin Struggles Below $98k as Fed Signals Weigh on Sentiment
Bitcoin (BTC) declined by 0.63% on Saturday, December 21, reversing Friday’s modest 0.43% gain to close at $97,505. This marked the second consecutive session where BTC failed to breach the $100k level, as cautious sentiment dominated the market.
Source :Coinmarketcap
ETF Inflows Provide Support Despite Concerns
The U.S. Bitcoin spot ETF market maintained its third consecutive week of inflows, totaling $457 million in the week ending December 20. However, daily outflows later in the week, combined with the Federal Reserve's recent rate cut and projections signaling fewer-than-expected rate reductions in 2025, dampened demand for BTC.
Key ETF Performance Insights
- **iShares Bitcoin Trust (IBIT):** Led the market with $1,447 million in net inflows.
- **Fidelity Wise Origin Bitcoin Fund (FBTC):** Recorded net outflows of $293 million.
- **Grayscale Bitcoin Trust (GBTC):** Reported $248 million in outflows.
- **Additional Funds:** The Grayscale Bitcoin Mini Trust and ARK 21Shares Bitcoin ETF also experienced significant outflows.
While BlackRock's IBIT remains a key player in stabilizing the ETF market, its first daily outflows since November 6 raised concerns about sustained investor interest. The Fed's rate cut decision, coupled with cautious forward guidance, further pressured demand for risk assets, including cryptocurrencies.
Spot ETFs May Shape BTC’s Future Growth
On Friday, the SEC approved two hybrid crypto-spot ETFs: the Hashdex Nasdaq Crypto Index US ETF and the Franklin Crypto Index ETF. Both funds feature an 80-20 weighting between Bitcoin and Ethereum.
Nate Geraci’s Commentary
ETF Store President Nate Geraci emphasized the significance of the move, stating:
“SEC has *approved* both the Hashdex Nasdaq Crypto Index US ETF & Franklin Crypto Index ETF… Will initially hold both BTC & ETH.”
Geraci also noted that these hybrid products could attract strong demand due to their diversification benefits, which advisors often favor in emerging asset classes.
The success of these ETFs could play a critical role in driving BTC and ETH prices higher. Meanwhile, BlackRock’s IBIT continues to anchor the market, but future price trends may hinge on broader adoption and diversification strategies.
BTC’s Short-Term Outlook
BTC’s short-term prospects remain tied to ETF flows, U.S. economic indicators, and regulatory developments. A significant rebound in ETF inflows or favorable economic data may help BTC retest $100k, while bearish trends could push prices toward $90k or lower.
