In a recent development, the US spot-ETF market witnessed a brief reprieve from a two-day outflow streak, driven by increased investor speculation regarding a potential rate cut by the Federal Reserve in June. On February 13, demand for US Bitcoin spot ETFs surged, leading to net inflows of $15.1 million. Although this figure is modest, it marks an end to the outflow period, lifting market sentiment slightly.
Despite this positive shift, the overall trend remains concerning, with a four-week streak of outflows continuing to pressure Bitcoin (BTC) prices. The current market scenario leaves BTC down approximately 19.74% year-to-date, even as it managed to reclaim the $70,000 mark. Analysts from Farside Investors highlight that several prominent ETF products reported significant weekly net outflows as follows:
– iShares Bitcoin Trust (IBIT): $234.8 million
– Fidelity Wise Origin Bitcoin Fund (FBTC): $124.7 million
– Grayscale Bitcoin Trust (GBTC): $77.0 million
In total, six ETF issuers experienced net outflows during the week in question, contrasting with just five ETFs that achieved weekly net inflows. This overall bearish trend in the ETF market reflects a wary investment landscape.
Looking ahead, the upcoming week promises to be critical for Bitcoin as important US economic data releases are expected to influence market sentiment substantially. Traders will be closely monitoring the FOMC Minutes due on February 18, which are anticipated to shed light on the Federal Reserve’s policy direction. Recently, Fed Chair Jerome Powell tempered expectations regarding a near-term rate cut, citing a resilient labor market and persistent inflation. However, should inflation show signs of easing, it may reinvigorate risk appetite among investors.
Additionally, February 20 is poised to be a pivotal date, as the US Personal Income and Outlays report, Services PMI data, and Q4 GDP figures will be disclosed. A higher-than-anticipated core PCE price index for December, coupled with strong activity in the services sector for January, could diminish speculation of a June rate cut, subsequently weighing on BTC demand. Conversely, a disappointing GDP report could overshadow other data, thus allowing the Services PMI a more considerable impact.
Traders should pay attention to price trends while reviewing the January Services PMI figures. Should input and output prices decrease, this would align with the January CPI report and may support a more dovish stance from the Fed.
Despite recent attempts to stabilize, the Bitcoin Fear & Greed Index indicates ongoing bearish sentiment, currently inhabiting the Extreme Fear zone. The index fell from 9 to 8 on February 15, despite a slight uptick from 7 on February 8. Historically, such extreme conditions can signal impending price recoveries, lending some support to a bullish outlook for Bitcoin in the medium term.
While the immediate market environment appears challenging, optimism surrounding potential legislative support from the US Senate regarding the Market Structure Bill contributes to a more favorable long-term perspective for Bitcoin.
