In brief
- Spot Bitcoin ETFs saw inflows of $91.6 million on Wednesday.
- Analysts suggested that expectations of a rate cut are the main driver of recent ETF inflows.
- The short-term outlook remains steady, but experts exercise caution.
Bitcoin ETFs ended a four-day streak of outflows Wednesday, pulling in $91.6 million according to data from Farside Investors. The reversal suggests renewed investor confidence despite last week’s pullback and string of outflows, analysts told Decrypt.
This week’s CoinShares Digital Asset Fund Flows report, published Monday, speculated that last week’s outsize outflows were likely a reaction to the U.S. Federal Reserve’s hawkish stance.
However, inflows of $91.6 million into Bitcoin ETFs Wednesday, and $110.4 million into Ethereum ETFs over the past two days, indicate that the narrative has shifted, according to Shawn Young, Chief Analyst at MEXC Research. He argued that investor sentiment has “begun to stabilize after a volatile stretch,” corroborating the recent flip in ETF flows.
Fed rate cut incoming?
The significant downward revision to the May and June jobs data, coupled with the firing of the U.S. Bureau of Labor Statistics chief by President Donald Trump, has fanned the fires of this narrative shift. The increased odds of a September rate cut over the past week underscore the market’s expectation of a bullish scenario, with predictors on Myriad positing an 82% likelihood of the Fed changing interest rates.
(Disclaimer: Myriad is an on-chain prediction market launched by Decrypt’s parent company DASTAN)
Analysts Decrypt previously spoke to said that the odds of a rate cut are driving a short-term surge in liquidity despite soft fundamentals and macro risks.
A combination of “cooling inflation, Bitcoin’s resilience and key support levels,” are the main drivers of the recent inflows, according to Young. However, he warned that while investor interest may have reignited, “it’s still too early to call a sustained uptrend.”
Bitcoin is currently trading at just under $115,000, up 0.8% on the day, according to CoinGecko.
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.