Bitcoin market (BTC) ended the week on a positive note, closing at approximately $64,000, marking a 1.4% increase from the previous week’s closing price of $63,100. However, the week itself was a rollercoaster ride for BTC, with significant price swings.
Volatile Week for Bitcoin
The week began with a dip in BTC prices, dropping to around $56,500 by Wednesday. This downward trend was likely fueled by profit-taking and broader market uncertainty. However, by Friday, prices had rebounded above $60,000, ultimately closing at $64,000, reversing the earlier negative trend. This price recovery suggests renewed investor confidence in Bitcoin.
Bitcoin ETF Outflows Continue
The negative trend continued for Bitcoin ETFs, with net outflows persisting for the fourth consecutive week. These outflows, totaling approximately $433 million, indicate a short-term bearish sentiment among ETF investors. This number is higher than the $325 million outflow recorded the prior week. However, there’s a glimmer of hope. Two consecutive days of inflows were observed between Friday of last week and Monday of this week, marking the first positive inflows after a long streak of outflows. It’s interesting to note that Grayscale’s Bitcoin Investment Trust (GBTC) also saw its first day of net inflow on Friday, following its conversion from a trust to an ETF structure.
Trading Volume on the Rise
Despite the outflows, trading volume for BTC ETFs remained relatively stable during the week. The cumulative trading volume since inception reached $246.6 billion, with $10.9 billion recorded during the week alone. This represents a 12.3% increase from the prior week’s $9.7 billion but remains below the average trading volume of $3.1 billion since inception. This uptick in trading volume suggests that the period of outflows may be nearing its end, with investor activity potentially picking up.
SEC Decision on Ethereum ETFs Looms
The spotlight is now on the Security and Exchange Commission (SEC) as they are expected to make a final decision on Ethereum (ETH) Spot ETFs in May. Following the recent delay of the Invesco & Galaxy filing on May 6th, the SEC has to decide on the VanEck and Ark 21Shares filings, with deadlines set for May 23rd and 24th, respectively. This decision is crucial for the crypto market, as it could trigger a wave of approvals or rejections for all seven ETH Spot ETF applications. The SEC is likely to apply the same criteria used for approving BTC ETFs in January to all these applications.
Approval for ETH ETFs Uncertain
Market participants anticipate that the SEC might withhold approval for these ETH Spot ETFs, despite greenlighting BTC ETFs earlier this year. This skepticism stems from concerns surrounding the liquidity of ETH’s spot and futures markets. Additionally, the SEC’s past classification of ETH as a security adds another layer of complexity to the approval process. If the SEC rejects these applications, issuers would need to resubmit their filings, restarting the approval process from scratch. This could potentially delay approval until Q4 2024 or even Q1 2025.
Macroeconomic Factors at Play on Bitcoin Market
On the macroeconomic front, inflation remains stubbornly high, giving the Federal Reserve (FED) more leeway to maintain a tighter monetary policy than initially anticipated for 2024. Market expectations were for a 75 basis point (bps) interest rate cut this year. However, the FED has kept interest rates steady in response to inflation. Current projections suggest a potential 25bps or 50bps cut in Q4 2024, with the first cut possibly happening in October/November 2024, assuming inflation data doesn’t worsen in the coming months.
Note: this Bitcoin Market article was based on story written by Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International (CSE:FNQ).
