ETFs
Bitcoin Price Swings as Bitcoin ETFs Post Outflows
Key takeaways
- Bitcoin price fell below $57,000 from around $64,500 last week before returning to the $64,000 level on Saturday.
- Amid the price decline, the Bitcoin ETF spot market saw its largest-ever outflows in a single day on Wednesday.
- Binance founder and former CEO Changpeng Zhao was sentenced to four months in prison for violating the Bank Secrecy Act while heading the crypto exchange.
- In its Q1 2024 shareholder letter, fintech company Block revealed that it will now dedicate 10% of its monthly gross profits from Bitcoin-related products to Bitcoin purchases.
Bitcoins (BTC) price fell below $57,000 on Wednesday, down from around $64,500 last Monday before recovering in what has been a strange week. Investors seem bitter on bitcoin on the spot exchange-traded funds (ETFs) last week, with Wednesday bringing record single-day net outflows.
Beyond the price fluctuations of bitcoin, the last week was marked by the condemnation of Binance founder and former CEO Zhao Changpengwith the fintech company Block’s (S.Q.) announcing Thursday that it would buy more bitcoins with a portion of its profits.
Bitcoin ETFs Post Record Outflows
Spot Bitcoin ETFs ended the week with investors withdrawing more money than expected, thanks to a record net outflow of $563.7 million on Wednesday, amid price fluctuations of the underlying crypto asset.
On this day, Blackrock’s iShares Bitcoin Trust (I BITE) experienced capital outflows for the first time since its stock market debut on January 11, with a net outflow of $36.9 million from the fund. Fidelity Bitcoin Wise Origin Fund (FBTC) also saw record outflows of $191.1 million in a single day last week.
So far, these ETFs have been the two most popular options among new investors looking to gain exposure to the market. Bitcoin ETF spot market.
But that wasn’t the only surprise when it came to spotting Bitcoin ETF flows last week.
Grayscale Bitcoin Trust (GBTC), the largest Bitcoin ETF by assets and the target of the largest and most consistent outflows thus far, recorded its first net inflows on Friday, according to data from Farside Investors. GBTC saw net inflows of $63 million that day, but has seen a net $17.46 billion flowing out of the fund since January 11. One of the main reasons for the shock that accompanied flows into GBTC was that the spot bitcoin ETF still has a much higher value. fee rate than other options on the market at 1.5%.
Despite the exits, some analysts suggested that investors may not need to be overly concerned. Demand for bitcoin spot ETFs was attributed to bitcoin’s rally earlier this year, but that may not be the only influence on bitcoin prices going forward, Coinbase analysts said.
“While this indicates a slowdown in capital inflows into the asset class via the ETF product, we believe ETF flows (while significant) only drive part of BTC price discovery given global markets and deeply liquid on centralized exchanges (CEX)” Coinbase analysts David Han and David Duong said in a commentary on Friday.
Former Binance CEO gets four months in prison
Zhao, former CEO of Binance was sentenced to four months in prison in a Seattle court last Tuesday. In November, Zhao resigned as head of the world’s largest crypto exchange after pleading guilty to violating US rules. Bank Secrecy Act. This guilty plea caused Binance to pay approximately $4.3 billionmarking one of the most significant corporate resolutions involving criminal charges against an executive in history.
Zhao’s relatively short prison sentence has been compared to that of former FTX CEO Sam Bankman-Fried, who was sentenced to 25 years in prison related to the fraudulent use of customer funds. Of course, a key difference in these cases was that Zhao was not accused of misusing his clients’ funds.
The founders of the Bitcoin wallet Samourai Wallet were also recently stopped on accusations linked to insufficient anti-money laundering standards.
Block to invest 10% of profits from Bitcoin products into Bitcoin
Blockthe company behind fintech products like Cash App and Square, said it will invest 10% of its gross profit from its bitcoin business to buy more bitcoin each month.
For context, Block’s first quarter gross profit of bitcoin through Cash App increased 59% year over year to $80 million. Cash App’s Bitcoin revenue from customer sales for the period was $2.73 billion, up 26% from the same period last year. However, around 3% of the company’s resources are deployed towards Bitcoin-related projects.
“We were one of the first public companies to put bitcoin on our balance sheet: we invested $220 million in bitcoin, and that investment grew approximately 160% to $573 million by the end of the first quarter,” said Block CEO Jack Dorsey. said in the letter.
What to expect in the markets this week
Investors and market watchers will be looking for more clues on any additional regulatory measures in the crypto markets.
Monday started with Robinhood (HOOD) revealing that he received a Wells Notice from the Securities and Exchange Commission (SEC) earlier in May regarding his crypto activity and that he may be subject to coercive measures of the regulator. The action could be similar to those taken by the SEC against Coinbase (PIECE OF MONEY) and Kraken last year related to their registration as brokers for the sale of crypto tokens that it considers unregistered securities.