Bitcoin exchange-traded funds in the United States posted their longest run of daily net outflows since they were launched earlier this year, part of a broader pullout from riskier assets during a tough time for global markets.
Investors pulled a total of about $1.2 billion from the group of 12 exchange-traded funds in the eight days ended Sept. 6, according to Bloomberg data. It comes amid a period of volatile stock and commodity prices due to economic growth concerns.
Mixed U.S. jobs data and deflationary pressures in China are weighing on traders, while uncertainty is gripping the cryptocurrency market, whose trends have become closely tied to stocks, based on the high short-term correlation between the two.
Hedging for Harris-Trump Debate
Bitcoin has faced challenges since early September, falling about 7%, but the world’s largest digital asset made a small gain over the weekend, rising about 1% to $54,870 at 1 p.m. in Singapore on Monday.
“The slight rise appears to be partly due to some high-profile influencers closing short positions,” said Sean McNulty, head of trading at liquidity provider Arbelos Markets, citing a recent social media post by Arthur Hayes, co-founder of bitcoin exchange BitMEX.
The improved performance of Donald Trump, the pro-crypto Republican presidential candidate, in opinion polls and market expectations may also have played a role, he added. He also pointed to the surge in demand for options contracts to hedge against potential volatility from Tuesday’s debate between Trump and Democratic candidate Kamala Harris, the current vice president, who has yet to announce her position on cryptocurrencies.
Awaiting US inflation data
Bitcoin exchange-traded funds in the United States invest directly in the largest cryptocurrency, which was launched with great fanfare in January. The unexpectedly high demand for them helped drive the cryptocurrency’s price to a record high of $73,798 in March. But inflows have since slowed, and bitcoin’s price has fallen by about 30% since the start of the year.
Caroline Morone, co-founder of Orbit Markets, which provides liquidity for trading in financial derivatives on digital assets, said the cryptocurrency is likely to trade within its recent price range of $53,000 to $57,000 until the release of US consumer price data on Wednesday. Inflation data may set the tone for expectations regarding the extent of monetary easing expected by the US Federal Reserve.
