Bitcoin ETF inflows hit weekly lows: Has the bullish streak ended?

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  • Bitcoin ETF inflows have hit a weekly low, as the market simmers with both “anticipation” and “uncertainty”.
  • A mix of internal dynamics and external factors leaves Bitcoin’s next target unclear.

As a seasoned researcher with over two decades of experience navigating financial markets, I can confidently say that the current state of Bitcoin (BTC) is reminiscent of a rollercoaster ride on a stormy day at an amusement park. The recent surge above $101K, following weeks of intense volatility, has certainly been exhilarating – but it’s also left me holding onto my metaphorical seat, bracing for the next dip or rise.

Over the last 40 days, Bitcoin’s [BTC] journey has been quite tumultuous, pushing the limits of endurance for its supporters. The peaks reached an all-time high (ATH) of $104K, but the troughs pulled it down to approximately $94K, keeping investors in a state of suspense.

The real test, it seems, is yet to come. Just a couple of days back, BlackRock’s (IBIT) backing triggered approximately $300 million in net ETF inflows, causing Bitcoin to jump by 4% within a day. This institutional backing propelled Bitcoin to close above the $100K mark.

As an analyst, I must confess that while the market has shown impressive gains recently, it seems precarious. My own observations indicate a slowdown in BlackRock’s inflows, which have now leveled off to net zero after a seven-day growth spree. Moreover, the overall ETF inflows have been cut in half, suggesting a potential cooling down of this upward trend.

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Currently, there’s chatter about a possible 0.25 percentage point interest rate reduction by the Federal Reserve, which is fueling optimism. However, the main strength of Bitcoin lies in its institutional support.

With initial backers reaping millions, everyone is curious about the big-time investors now. Will these institutional giants drive Bitcoin towards the aspiring $200K mark, or could their potential waning interest spark fresh uncertainty instead?

Bitcoin’s latest surge might just be a ‘Cautious’ optimism 

It appears that initial investors are selling off their assets as they reach the crucial barrier of $100K, suggesting a shift from excessive greed and a decrease in risk tolerance.

However, the latest rise pushing Bitcoin beyond $101,000 – following a period of constant fluctuation between $94,000 and $100,000 – has ignited renewed enthusiasm among investors.

Read moreBitcoin halving could be a ‘sell-the-news’ event, at least for a few months

As reported by AMBCrypto, the optimism is somewhat guarded, stemming more from “expectations” rather than the “implementation” of a Federal Reserve interest rate reduction.

Though America’s job market is looking up as the unemployment rate drops, there’s been an observable resurgence of inflation. Specifically, the Consumer Price Index (CPI) has climbed to 2.7% over the past year, with a slight jump of 0.3% in merely a single month.

As an analyst, I find myself eagerly awaiting the forthcoming FOMC meeting next week. Will the Federal Reserve choose a cautious approach, potentially increasing interest rates due to the recent surge in inflation? Alternatively, could they opt for a more lenient stance, contemplating a rate reduction to bolster the economy?

Regardless,  the short-term impact on Bitcoin’s price is already evident.

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Source : CryptoQuant

U.S. investors have been quick to purchase Bitcoin, mainly via Coinbase, following a distribution phase that was prevalent throughout most of the second week of December and caught their attention.

As I delve deeper into my analysis, it’s clear that the recent surge in Bitcoin’s price is indeed encouraging. However, for this upward trend to be more than just a fleeting moment, it’s crucial that Bitcoin’s underlying strengths, such as robust inflows into Bitcoin ETFs, continue to attract sustained interest from both individual and institutional investors.

Declining Bitcoin ETFs signal signs of uncertainty

Ever since their introduction in January, Bitcoin ETFs have emerged as a favored method for individual investors to tap into the volatile nature of Bitcoin, garnering robust backing from institutional players.

Following the surge of enthusiasm caused by the “Trump pump”, Bitcoin Exchange-Traded Funds (ETFs) experienced a historic high of $1.3 billion in investments. Notably, a substantial portion of this sum, approximately $1.2 billion, came from BlackRock.

Source : FarsideInvestors

On the other hand, it appears that there’s a change in direction based on current tendencies. The growth streak for BlackRock’s inflows has come to an end, marking a leveling off after consistent increases.

Although this doesn’t indicate an entirely pessimistic view of Bitcoin, it does suggest a decrease in interest for Bitcoin Exchange-Traded Funds (ETFs), as the total inflows reached a record low for the week.

Read Bitcoin’s [BTC] Price Prediction 2024–2025

This supports AMBCrypto’s stance of a ‘moderate’ optimism in the market, suggesting that Bitcoin might hit a low of around $100K, yet it’s not yet strong enough to push it towards a fresh record high.

In essence, the market finds itself at a fragile equilibrium, with optimism still present, but the path towards new peaks appears unclear.

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2024-12-12 17:12