Investors are increasingly betting that Bitcoin’s price will decline in September, leading to significant outflows from Bitcoin exchange-traded funds (ETFs). Last week, $319 million was withdrawn from Bitcoin funds managed by firms like Fidelity and ARK Invest, according to a report by asset manager CoinShares. The report highlighted that short Bitcoin investment products, which are used to bet against the price of Bitcoin, saw $4.4 million in inflows—the highest since March.
Despite the overall negative sentiment, BlackRock, the world’s largest asset manager and a leading Bitcoin ETF issuer, bucked the trend with more than $219 million in inflows to its iShares ETF.
CoinShares itself experienced $4 million in outflows from its Bitcoin funds. The report attributed the broader trend of withdrawals to stronger-than-expected economic data from the U.S., which has reduced the likelihood of a significant interest rate cut by the Federal Reserve. This has led to a more cautious outlook for cryptocurrencies, as they are considered “risk-on” assets that are more volatile and sensitive to interest rate expectations.
The anticipation around the Federal Reserve’s potential interest rate changes has kept investors on edge. Since the central bank raised rates to a 20-year high in 2022, markets have been eagerly waiting for a reduction. Federal Reserve Chair Jerome Powell indicated in August that a policy change might be imminent, but recent economic data has tempered expectations of a substantial rate cut.
The Commerce Department revealed that the personal consumption expenditures price index increased by 0.2% over the month and 2.5% year-over-year, aligning with analyst predictions. Despite this, markets began to anticipate a smaller rate cut from the Federal Reserve than initially expected.
This negative outlook extended beyond Bitcoin, as European investors pulled out of crypto funds. Ethereum, the second-largest cryptocurrency by market cap, saw $5.7 million in outflows from investment products. U.S. Ethereum ETFs, approved by the SEC in May, were also hit.
As of now, Bitcoin is trading at $58,622 per coin, down over 7% in the past seven days, according to CoinGecko data. The asset is currently 20% below its all-time high of $73,737, which it reached in March following the long-anticipated approval of Bitcoin ETFs in the U.S. market.