Bitcoin Traders Scale Back Bets as Spot ETF Inflows Wane and Halving Hype Fades: Bloomberg Report

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As someone who has closely followed the cryptocurrency market for the past few years, I find the recent trend in Bitcoin trading quite intriguing. The Bloomberg News article sheds light on the fact that optimistic traders are reining in their bets on Bitcoin due to the waning influence of significant driving forces – robust inflows into US-listed spot Bitcoin ETFs and the hype surrounding the Bitcoin halving event.

I’ve noticed in a Bloomberg News article recently that enthusiastic Bitcoin investors are scaling back their wagers on the front-runner cryptocurrency. The reasons behind this shift? The momentum from substantial investments into U.S. Bitcoin spot ETFs and the excitement surrounding the Bitcoin halving event have begun to wane.

According to Bloomberg’s latest report, the Bitcoin funding rate in the perpetual futures market turned negative on April 19 for the first time since October 2023. This change indicates a decrease in demand for Bitcoin after a series of record-breaking highs caused by the introduction of ten US-listed spot Bitcoin ETFs on January 11.

I’ve observed a decrease in net inflows into those particular ETFs lately. Surprisingly, the highly anticipated Bitcoin halving event that just occurred last week, reducing the production of new coins, showed only minimal impact on the digital currency’s price.

According to Bloomberg’s report, Bitcoin reached its highest point at $73,798 during March. However, it underwent a significant decrease of approximately 13%, resulting in its current value of $64,214, as observed on Thursday morning in London.

According to an article, the diminishing interest in Bitcoin purchases from buyers can be partially explained by heightened risk aversion caused by geopolitical tensions in the Middle East and anticipated Fed Reserve rate hikes instead of cuts. Quoted in the piece is Julio Moreno, CryptoQuant’s Head of Research, who explains that a negative funding rate signifies a decreased inclination among traders to open long positions.

I’ve come across Bloomberg’s analysis mentioning Vetle Lunde from K33 Research, who brings attention to the rare occurrence of the current 11-day stretch of neutral-to-below-neutral funding rates in futures markets. Previously, such dips have been followed by a surge of leveraged wagers. In Lunde’s perspective, this extended phase of discounted perpetual futures could indicate a potential period of price consolidation ahead.

The article points out that the reduction in Bitcoin’s funding rate aligns with a decrease in investments into US-based Bitcoin spot ETFs as shown by Bloomberg’s data. These ETFs have only drawn in $170 million this month, which is a substantial decrease from the $4 billion they brought in during the same timeframe in March.

Additionally, according to Bloomberg’s latest findings, open interest in Bitcoin futures at CME Group has dropped by nearly 18% from its peak, indicating decreased appetite among US institutions for crypto-backed investments and risk management tools. As the crypto sector searches for fresh momentum, there is growing curiosity regarding Hong Kong’s upcoming launch of Bitcoin and Ethereum spot ETFs on April 30th. However, it remains to be seen if these new offerings can draw even a fraction of the interest garnered by their US counterparts.

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2024-04-25 16:23