Bitcoin Falls Amid High US Inflation; Bitcoin ETFs See Major Inflows & Outflows
Summary:
Bitcoin experienced a 2.3% fall on March 12, following persistent high inflation in the US and potential impacts on predicted interest rate cuts in 2024. The Federal Reserve may postpone decisions on rate cuts, according to JPMorgan Chase CEO, Jamie Dimon. A surge in inflows into Bitcoin Exchange-Traded Funds (ETFs) is helping counteract the sell-off triggered by inflation. High-profile funds' recent inflow increases included BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund. Meanwhile, Grayscale Bitcoin Trust reported significant outflows.
On March 12, Bitcoin (BTC) experienced a decline of 2.3% following the opening of the Wall Street, with the market responding to persistent high inflation in the US and its potential impact on interest rate reductions predicted for 2024.
Based on data extracted from Cointelegraph Markets Pro and TradingView, the BTC plummeted up to 6% after achieving a new record high of $73,054 on March 12, tumbling to $68,636 on Bitstamp. The fall was triggered by the February Consumer Price Index (CPI) data that was higher than predicted, at 0.4% in February, as per the data from the US Bureau of Labor Statistics (BLS). The inflation rate for the year rose to 3.2%, compared to the anticipated 3.1% and January’s 3.1%. As per the official statement from BLS, increased expenses for shelter and gasoline accounted for more than 60% of the monthly surge in the all-items CPI index.
Following the release of the CPI data, discussions started regarding the possibility of the Federal Reserve cutting interest rates in the near future. As per the CME's FedWatch tool, the probabilities of an interest rate cut in March stands at a mere 1% during the time of reporting as compared to 15% on Feb. 12. This implies that investors are predicting that the US central bank will withhold any changes in the interest rates for March and May, with the first possible reduction expected to be in June.
JPMorgan Chase CEO, Jamie Dimon, expressed his preference for the Federal Reserve delaying any decision on the rate cuts until later in the year. At the Australian Financial Review business summit in Sydney, Dimon asserted that the rates could be promptly and drastically cut, and suggested waiting till or after June to let things settle. He warned that higher rates may be prevalent for an extended period and urged the Federal Reserve to make decisions based on data analysis.
In the growing battle against inflation, trading resource The Kobeissi Letter highlighted the rise in the core services inflation excluding shelter by a significant 0.7% month-over-month, marking the highest increment since September 2022. In February, this metric showed another month-over-month increase of 0.5% following multiple surges in 2023.
The rise in the inflow into the spot Bitcoin Exchange-Traded Funds (ETFs) is helping offset an inflation-induced sell-off. As per Arkham, the crypto intelligence firm, inflows into the spot Bitcoin ETFs in last week were around "55.78K BTC ($3.68B) of inflows". Market analysts recognizing increasing ETF inflows with "half a billion of net inflows" on March 11.
BlackRock’s iShares Bitcoin Trust, IBIT, leads the race with Bitcoin worth $14.76 billion. Following closely is Fidelity’s Wise Origin Bitcoin Fund, FBTC, with over $9.26 billion in BTC under their management. At $1.8 billion worth of holdings, the ARK 21Shares Bitcoin ETF, ARKB, secures the third position among top funds. Over the past eight weeks, Grayscale Bitcoin Trust, GBTC, witnessed outflows totaling $11.04 billion and reported $494.1 million in outflows on March 11, the highest daily volume of capital withdrawals since Jan. 23.
Please note that this article doesn't contain any investment advice or suggestions. All investments and trading decisions bring with them a level of risk, hence it is imperative for readers to do their due diligence before making any investment decisions.
Published At
3/13/2024 1:10:53 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.