The launch of a spot Bitcoin exchange-traded fund (ETF) in Hong Kong on April 30 triggered a significant decline in Bitcoin’s price.
Despite expectations of substantial demand, including projections of $140 million, the opening day’s total trading volume, incorporating Ether ETFs, amounted to only $12.4 million.
Consequently, the premium on Bitcoin futures plummeted to its lowest point in five months, indicating a potential bearish trend.
Various factors have contributed to this negative pressure on Bitcoin’s price.
Weak macroeconomic conditions and uncertainties surrounding U.S. spot BTC ETF flows have been prominent among them.
Investors’ confidence in the United States Federal Reserve’s ability to implement two interest rate reductions in 2024 has waned, with Fed Chair Jerome Powell scheduled to deliver post-meeting remarks on May 1, prompting cautious market behavior.
Continued net outflows from U.S.-listed spot Bitcoin ETFs over four consecutive sessions have raised further concerns.
Investors have been withdrawing funds from the Grayscale GBTC ETF due to its high fees, while the Blackrock IBIT ETF has experienced minimal activity.
This trend suggests diminishing interest in such investments within the U.S. market despite the lackluster performance of the Hong Kong spot ETF.
Previously, cryptocurrency ETFs based on futures contracts listed on the Hong Kong exchange (HKEX) had attracted substantial net inflows totaling $529 million in the first quarter of 2024.
Hence, the disappointing debut of the spot instrument on April 30 came as an unexpected setback. Analysts, including Bloomberg’s Eric Balchunas, speculate that poor timing may have contributed to the low trading volumes.
The broader financial landscape also played a role, with the S&P 500 poised to register its first negative monthly performance in six months in April, and yields on U.S. 5-year Treasury notes rising from 4.2% to 4.7%.
Market participants often exit fixed-income positions amid fears of rising inflation or expectations of continued
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