- Bitcoin ETFs marked a steady decline in net inflows over the past three days
- Investors pared back their risky bets ahead of key inflation data on the leading crypto
- The Federal Reserve’s preferred price gauge — PCE — is slated for release today
Bitcoin ETFs Mark Slowdown in Inflows
Bitcoin exchange-traded funds saw a steady decline in net inflows over the past three days, indicating investor cautiousness ahead of a key report on inflation. In the three days to Wednesday, all 11 approved spot Bitcoin ETFs in the US saw inflows of $31 million, $21 million, and $12 million.
Bitcoin ETFs have recently become a hot commodity on Wall Street and among ordinary investors who want to get a piece of the novel asset class. The breakthrough in these so-called spot exchange-traded funds is that, after more than 10 years of rejections, the Securities and Exchange Commission finally allowed funds that hold actual Bitcoin to be traded on exchanges next to traditional assets like stocks and bonds.
Ethereum-Based ETF Coming Soon
That’s also how the entry barrier gets lowered, enabling anyone to participate in the broadening adoption of crypto assets. Before these spot ETFs, the SEC had greenlighted futures-based ETFs, which did not hold actual coins. Rather, they were packaged with futures contracts that allowed investors to speculate on the price without owning the underlying asset.
After these spot ETFs were finally structured with actual Bitcoin, investors are now gearing up to welcome the first Ethereum-based ETFs. Analysts predict that the first deals might be made sometime next week and also expect to see inflows of more than $5 billion in the first week.
PCE Report Keeps Investors on Edge
Now, back to the recent developments in the spot BTC ETF space. The pronounced slowdown in net new money poured into the investment vehicles indicates looming consolidation ahead of the Federal Reserve’s preferred measure of inflation — PCE.
The PCE report, short for Personal Consumption Expenditures Index, measures price growth without factoring in more volatile items such as food and energy. With this in mind, the print is expected to show that price pressures in May moderated to 2.6%, down from the higher April figure of 2.8%.
If the consensus views materialize, this will solidify expectations over receding inflation and help pave the way toward the anticipated interest rate cuts by the Federal Reserve. How will they affect the price of Bitcoin?
Bitcoin and PCE Report
The original digital currency is indirectly tied to interest rates in that lower rates encourage more spending on risk assets, such as Bitcoin. When rates go down, they help stimulate the economy by making money cheaper and more affordable.
And vice versa, high interest rates suggest a contracting economy because borrowing costs are higher, and businesses and consumers are not too excited to splurge on risky assets. Rather, they prefer to sit tight and save up with yielding deposits.
Bitcoin Price Steady Near $61,500
How is Bitcoin faring ahead of today’s major economic report? Bitcoin prices this week dropped to a two-week low of $58,500. The decline was short-lived, as bargain-hungry crypto traders scooped up the discounted token and raised the price back above the key $60,000 level.
Early on Friday morning, Bitcoin was circulating at nearly $61,500 per coin, and traders braced for potential upcoming volatility when the PCE report was released later today.
