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Bitcoin moved back into the $42,000 range Friday after a disappointing week of trading. Meanwhile, stocks slipped even as the latest economic data bolstered expectations that the Federal Reserve can achieve a soft landing after all.

Bitcoin (BTC), which struggled to break out above $40,000 this week, posted a recovery Friday, gaining more than 8% since its Tuesdays low. Ether (ETH) was also on the recovery path, trading around 2% higher Friday.

Analysts are cautiously optimistic that bitcoins ETF-driven selloff could be easing, even as outflows mount. The new spot products end their third week of trading Friday, and outflows are increasing. Spot bitcoin ETF net outflows hit a high of $158 million Thursday.

Read more: Bitcoin ETFs see net outflows for 4 straight days

This doesnt necessarily mean that the GBTC outflows are over, Noelle Acheson, author of the Crypto is Macro Now newsletter, said. Yesterday, they were $394 million, which sounds like a lot but is the lowest outflow since launch dayrather, it reminds us that flows matter but are not the main driver of the BTC price.

Personal consumer expenditures price (PCE) index data released Friday was in line with analysts expectations, showing a 0.2% increase in December and 2.9% high year-over-year. The numbers are a sign that while inflation is still elevated, it is trending lower.

Spending last month increased 0.7%, comfortably exceeding the 0.5% that was expected, Criag Erlam, senior market analyst at Oanda, said. It also came on top of the upward revision to the November reading, which increased to 0.4% from 0.2% previously. All things considered, its another sign that the US consumer and economy are in very healthy shape going into the new year.

Read more: Spot bitcoin ETF net outflows hit highest level yet on day 9 of trading

Still, traders seemed skeptical. The S&P 500 traded sideways and the Nasdaq Composite lost around 0.4% toward the end of Fridays session. Both indexes remain modestly higher over the week ahead of the Feds Open Markets Committee Tuesday.

Minimal yield moves Thursday and Friday, thanks to the expected economic data releases, are a positive sign for traders, Tom Essaye, founder of Sevens Report Research, said Friday.

In order for economic data to move yields, it must be so good or so bad it alters the markets outlook for rate cuts and either pushes it back more (yields higher) or pulls it forward (yields lower), Essaye said.

Going forward, the calmer yields are like yesterday the more theyll support these gains in stocks.

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Bitcoin bounces even as ETF outflows mount - Blockworks

Spot bitcoin ETFs saw the highest level of net outflows in a single day on Wednesday as flows into BlackRocks product slowed.

The 10 US funds holding BTC directly endured outflows of $158 million on their ninth day of trading, according to Bloomberg Intelligence data the highest in a single day thus far.

Grayscale Investments Bitcoin Trust ETF (GBTC) continued to weigh the group down, with $429 million leaving the fund.

Read more: As GBTC outflows continue, will the largest bitcoin ETF be dethroned?

While BlackRocks iShares Bitcoin Trust (IBIT) saw inflows of $66 million, the gains were a notable dip from previous days. IBIT had reeled in $272 million and $160 million on Monday and Tuesday, respectively.

Fidelity Investments Wise Origin Bitcoin Fund (FBTC) led the slate of bitcoin ETFs on Wednesday with inflows of roughly $126 million.

The $158 million of outflows marked the third consecutive day of combined outflows for the 10 spot bitcoin ETFs.

Read more: Bitcoin ETF Tracker

After the funds notched net inflows of $43 million on Friday, their outflows totaled $76 million on Monday and $106 million on Tuesday.

Overall, spot bitcoin ETF net inflows stand at $824 million since the funds launched on Jan. 11, Bloomberg Intelligence data indicates. Inflows for the ETFs when excluding the outflows of higher-priced GBTC is $5.2 billion.

David Lawant, head of research at crypto prime brokerage FalconX, said in an X post that the driving forces of spot bitcoin ETF flows GBTCs heavy outflows and the sizable net gains from IBIT and FBTC will both taper off.

While the former dominates in the short run, the latter will dominate in the medium/long run by a mile, Lawant added.

Read more: GBTCs asset bleeding to blame for week of flat crypto product flows

Bitwise Chief Investment Officer Matt Hougan has said he believes spot bitcoin ETFs could see $55 billion in net flows in their first five years on the market.

21Shares President Ophelia Snyder told Blockworks in an interview earlier this month that a number of investors will be slow to adopt spot bitcoin ETFs. Others that do might start with small allocations before ramping those positions up later on.

So I think this fixation on the short-term flows is crazy short-sighted and largely not the point, she said.

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Spot bitcoin ETF net outflows hit highest level yet on day 9 of trading - Blockworks

Grayscales recently launched Bitcoin ETF, GBTC, is witnessing a gradual decline in outflows, as around $5 billion in digital assets are withdrawn from the fund.

Despite the substantial outflows, market analysts express optimism that the worst may be over. This sentiment suggests a potential positive shift in Bitcoins price performance.

In the wake of the US Securities and Exchange Commissions (SEC) recent approval of several spot Bitcoin ETFs, Bitcoin experienced a notable 20% decline. Significant outflows from Grayscale primarily fueled this downturn.

Analysts attribute the substantial outflows to profit-taking maneuvers by investors previously exposed to the funds discount. Additionally, there were indications that some traders were reallocating their investments away from GBTC due to its comparatively high fee.

GBTC currently charges a 1.5% fee, while competing ETFs such as BlackRocks IBIT have fees under 1%.

These factors played a pivotal role in the initial surge of outflows from the fund. However, recent trends indicate a slowdown, with $255 million withdrawn on the eleventh day of trading, the lowest GBTC outflow since the first day of trading. Still, the total outflows from the fund are over $5 billion, according to BitMEX Research.

Concurrently, the sell-off has led to a substantial reduction in Grayscales Bitcoin balance, which now stands at over 508,000 BTC, valued at $21 billion, according to Arkham Intelligence. It is worth noting that since the launch of spot Bitcoin ETFs, the fund has deposited 113,129 BTC into Coinbase, equivalent to $4.6 billion.

Market analysts interpret the decline in GBTC outflows as a positive indicator of Bitcoins price trajectory.

For instance, JA Maartun recently shared a chart illustrating the diminishing impact of Grayscale on BTC prices. Despite the sell-off, Bitcoins value not only remained stable but also demonstrated an impressive increase.

All selling pressure from Grayscale was absorbed and the price even managed to increase, which is impressive, Maartun said.

Another analyst, Ted, dismissed the narrative around GBTC selling as excessively sensationalized. His analysis revealed that the influx of Bitcoin into the market through nine new spot BTC ETFs surpassed the outflow from GBTC by over 120,000 BTC in the last 90 days.

In contrast, Resdegen highlighted Bitcoins resilience in trading above $41,000 despite the various selling pressures. The analyst pointed out significant factors, such as GBTCs substantial outflow, the US government announcement of selling $130 million worth of seized BTC, and Celsius movement of $1 billion in ETH, which seemingly had no adverse impact on the top cryptocurrency price.

Anticipating bullish signals on the horizon, Resdegen emphasized the potential for bears to face significant challenges, particularly with the upcoming BTC halving event.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that ourTerms and Conditions,Privacy Policy, andDisclaimershave been updated.

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How Bitcoin Price Will React As Grayscale's Sell-Off Slows Down - BeInCrypto

The driving force behind the recent sell-off in bitcoin may have run its course, according to JPMorgan. Bitcoin rallied in the second half of 2023 as optimism around the approval of exchange traded funds grew, but their debut earlier this month has proven to be a "sell the news" event for the world's largest cryptocurrency. Bitcoin briefly traded above $49,000 shortly before the funds launched, but then fell more than 20% before seeming to stabilize around $40,000. BTC.CM= YTD mountain Bitcoin has retreated since the approval of bitcoin ETFs. JPMorgan strategist Nikolaos Panigirtzoglou said in a note to clients Thursday that the main source of the selling has come from the Grayscale Bitcoin Trust (GBTC) . The fund, which traded at a steep discount as an over-the-counter product before investors became confident that a conversion to an ETF would happen, has seen heavy outflows over the past two weeks. "Profit-taking on previous GBTC investments, made at a discount to [net asset value] last year, has likely been a major driver behind bitcoin's correction; $4.3bn has thus far exited GBTC since its conversion to ETF," Panigirtzoglou said. Some outflows from GBTC were expected, given the prior discount and its high cost relative to other bitcoin ETFs. Panigirtzoglou, who had estimated $3 billion of outflows, said that the decline is likely profit taking rather than a sign that the cash is moving to other options, and that the outflows should slow from here. "We conclude that GBTC profit taking has largely happened already. In turn, this would imply that most of the downward pressure on bitcoin from that channel should be largely behind us," Panigirtzoglou said. Even with the outflows from GBTC, the fund still has about $20 billion in assets under management. And some of the other bitcoin ETFs are seeing big inflows, with funds from iShares ( IBIT ) and Fidelity Wise Origin ( FBTC ) both surpassing $1 billion in inflows. The total inflows and decline in price of bitcoin have missed the optimistic estimates of some crypto bulls, but the dollar amounts are still large compared to other ETF launches.

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This is what was behind the bitcoin sell-off and why JPMorgan thinks it could be ending - CNBC

The US Personal Consumption Expenditure (PCE) Index, the preferred inflation gauge of the US Federal Reserve, rose 2.9% annually and 0.2% monthly last December. So-called Core PCE increased by 0.1% monthly but declined by 3.2% yearly, making for an interesting year ahead for Bitcoin.

Stock futures were slightly lower at the start of the US trading day, while cryptos and Bitcoin remained mostly flat. Before the US inflation news, Bitcoin traded at $41,122.08 and declined marginally before recovering to $41,831.43 at press time.

The PCE is still above the 2% target the US Federal Reserve is using to benchmark tightening effects. The central bank has brought the Federal Funds rate to between 5.25 and 5.5% since March 2022, which has seen prices in most sectors cool off significantly, except for shelter.

People sell risky assets when they feel the central bank may induce a recession by tightening fiat currency policies too aggressively. Investors then move to more stable investments like government bonds, which are backed by the governments full faith. When the bank starts cutting rates, the prices of risky assets like Bitcoin can rise as risk appetite grows.

Read more: 7 Ways To Handle Retirement With Increasing Inflation

The US Treasury plans to announce its borrowing plans for 2024 on Jan. 31, 2024. Higher government borrowing can signal that the government is willing to take on more risk and lower the appeal of government bonds since more debt increases the chances of a default. As a result, some investors could choose Bitcoin.

The approval of certain exchange-traded funds (ETFs) that track the price of Bitcoin directly means that the asset has a chance to establish itself as a mature investment vehicle. An ETF allows an investor to get direct exposure to BTC price changes without the need to buy Bitcoin directly.

A co-founder of the first gold ETF, Hector McNeil, says a Bitcoin ETF vehicle will increase adoption. He likens it to how a gold ETF removed the hassle of digital asset management but encouraged more people to invest in the asset.

ETFs are at their most powerful when they give market access to difficult-to-trade asset classes. [ETFs] democratize ownership. Having asset managers like BlackRock and Invesco and Fidelity, thats a massive stamp of approval.

Read more: Bitcoin Price Prediction 2024/2025/2030

McNeil expects BTCs supply constraints to push up the price gradually. Even though most investors do not use it as a currency, Bitcoin is still regarded as a store of value and has technological properties that make it well-suited to function as a currency, he believes.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that ourTerms and Conditions,Privacy Policy, andDisclaimershave been updated.

See the article here:

Why US Inflation and Bitcoin Will Always be Linked - BeInCrypto