ETFs and other bitcoin (BTC) and cryptocurrency investment products saw net inflows totaling $2 billion in the first week of June.
In this way, they reached their fifth consecutive week of positive inflows with $4.3 billion, according to the most recent CoinShares report.
In the following graph you can see the good performance of financial instruments based on bitcoin and cryptocurrencies in the last five weeks.
Over the past week, trading volumes in ETFs increased to $12.8 billion , which is up 55% from the previous week. ETFs listed on the US stock exchange recorded the most inflows, totaling $1.98 billion. This increase in investments in this type of financial instruments is led by the fund managed by BlackRock, the largest asset manager in the world. BlackRock 's iShares Bitcoin Trust (IBIT) ETF has 302,539 BTC under its management, making it the fund with the most bitcoin holdings in the world.
All Eyes On the US Macroeconomy
According to CoinShares analyst James Butterfill, the change in investor sentiment is a direct response to “weaker than expected” macroeconomic data in the United States. By this he refers to the data on the price index of personal consumption expenditure (PCE) of that country, published at the end of May.
This inflation indicator, used by the Federal Reserve (Fed) to guide monetary policy, had the expected result, so investors moved closer to bitcoin ETFs in search of returns that exceed interest rates and markets reacted upward.
Additionally, Butterfill points out that the increase in capital inflows into ETFs anticipates expectations of a cut in the US monetary policy rate. Next Wednesday, the Federal Reserve (Fed) will have a meeting in which decisions related to interest rates will be made.
“I would be careful about making a big move before the Federal Reserve meeting. "We can't be sure whether [Federal Reserve Chairman] Jerome Powell won't be more emphatic about keeping rates high for longer," said. CNBC analyst Jim Cramer.
For his part, Michael Brown, senior research strategist at Pepperstone, commented that it is "unlikely" that there will be a significant change in Fed policy. "It will continue to chart a patient course, giving restrictive policies time to work, while continuing to seek greater 'confidence' that inflation is returning to 2%.
A demonstration that they plan to lower rates this year may bolster demand for risk assets such as stocks, bitcoin and cryptocurrencies. . When the Federal Reserve lowers interest rates, it is generally considered an indicator that the economy is weakening and investors are looking for higher returns.
Summer May Play Against the Price of Bitcoin
The macroeconomics, coupled with a steady acquisition of bitcoin by ETFs, is bullish for the price of bitcoin. Spot ETF management companies must purchase and hold bitcoin in their treasuries to back their shares.
As more investors put money into these funds, the entities that manage the ETFs must acquire more bitcoin to maintain adequate support. This, in turn, reduces the amount of bitcoin available on the open market, which can lead to an increase in price due to limited supply.
Charles Edwards, founder of Capriole Investments, noted that it could take quarters (at best) for institutions to approve and allocate funds to bitcoin ETFs. This means that a massive influx of money through ETFs probably hasn't happened yet .
However, another factor to consider is that we are in the month of June. “Summer is a typical lull in the market and a period of risk aversion for many major asset managers,” Edwards explained.
This could slow the short-term purchase of bitcoin by institutional investors , leading to stagnation or, failing that, a drop in the prices of the digital currency.
