Markets
Why Bitcoin Stays Below $70,000 Despite Large ETF Flows
Key takeaways
- The second largest daily inflows into spot Bitcoin ETFs failed to keep Bitcoin prices above $70,000. Analysts say hedge funds and commodity traders engage in price arbitrage by buying ETFs and selling CME bitcoin futures.
- Robinhood announced a deal to buy crypto exchange Bitstamp.
- Semler Scientific takes a leaf out of the microstrategy playbook and acquires Bitcoin.
- Market watchers will be watching CPI data and remarks from Fed Chairman Jerome Powell to see when the central bank might cut rates.
Bitcoin prices remained fairly stable last week, although they fell significantly below the $70,000 mark on Friday, after climbing to over $71,000 earlier in the week.
The second-largest daily inflows into Bitcoin spot exchange-traded funds were unable to maintain Bitcoin’s price momentum as traders engaged in arbitrage to make money on the difference between spot and futures prices. Robin Hood (HOOD) made headlines with the acquisition of Bitstamp in a bid to expand its business overseas. Additionally, another publicly traded company has decided to take advantage of bitcoin as a treasury asset.
Bitcoin ETFs See Second Largest Daily Flow
Last Tuesday, U.S. spot bitcoin ETFs recorded their second-highest daily net inflow, reaching $886.6 million, according to data from Farside Investors. Fidelity’s Wise Origin Bitcoin Fund (FBTC), contributing $378.7 million, followed by BlackRock’s iShares Bitcoin Trust (I BITE) with 274.4 million dollars.
This inflow marked sixteen consecutive days of net inflows for these ETFs, which has since expanded to nineteen days. It was overall a good week for Bitcoin ETF inflows, as nearly $1.6 billion in flows hit the market from Tuesday to Thursday alone.
Cumulative net inflows for US Bitcoin ETFs have now reached $15.6 billion, with IBIT surpassing Grayscale Bitcoin Trust (GBTC) as a major player in the market. Despite the strong capital inflows, the price of Bitcoin has only flirted with a new all-time high and has yet to reach the $73,000 mark seen in March.
Traders were bullish on spot Bitcoin ETFs when they began trading in January, with inflows fueling a rise in Bitcoin prices. However, this trend could change as traders now bet on arbitrage.
Hedge funds and commodity traders buy Bitcoin ETFs for spot while selling CME futures, or basic negotiationaiming to take advantage of the futures market premium over spot prices, according to BitMEX Research.
What Bitstamp Buy Means for Robinhood
that of Robinhood $200 million acquisition crypto exchange Bitstamp is accelerating its foray into digital assets, particularly outside the United States. This expansion comes about six months after Robinhood began offering crypto trading to its customers in the European Union.
Bitstamp holds 50 active licenses and registrations worldwide, positioning Robinhood to directly compete with industry leaders like Binance And Coinbase (PIECE OF MONEY). Bitstamp’s expansive spot exchange, widely used in Europe and Asia, offers more than 85 tradable assets, including staking and lending services, and is intended to drive the growth of Robinhood Crypto as a premier institutional business.
“The acquisition of Bitstamp is a major step in the growth of our crypto business,” said Johann Kerbrat, CEO of Robinhood Crypto. “Bitstamp’s long-standing and highly trusted global exchange has demonstrated resilience through market cycles.”
With that deal expected to close in the first half of next year, Robinhood’s crypto business is thriving, generating about a fifth of the company’s net revenue in the first quarter, despite regulatory challenges in the United States. United.
Semler Scientific follows Microstrategy’s Bitcoin playbook
Semler Scientist (SMLR) announced last Thursday that it would bolster its existing bitcoin holdings with a recent $17 million purchase, while also planning to raise $150 million. In May, the healthcare company announced a $40 million Bitcoin acquisition, which subsequently sent its stock up about 25%. The company now owns 828 bitcoins in total.
Semler Scientific has strategically diversified by integrating bitcoin into its business strategy. CEO Doug Murphy-Chutorian said: “Semler remains focused on our dual strategies of growing our healthcare business and acquiring and holding Bitcoin. »
Semler’s recent announcement aligns with the broader trend of publicly traded companies holding significant amounts of Bitcoin, collectively totaling 308,688 BTC worth approximately $21.4 billion, according to Bitcoin Treasuries. Microstrategy (MSTR) is the most notable example here, holding nearly $15 billion worth of bitcoin, but others include Tesla (TSLA) and Block (S.Q.).
Semler stock jumped immediately after the announcement and is trading up about 27% from last Thursday’s close. Microstrategy stock has more than doubled since the start of the year as its Bitcoin portfolio has benefited from rising Bitcoin prices.
What to expect in the markets this week
Market observers in traditional financial and cryptocurrency markets will be closely monitoring developments. Consumer Price Index (CPI) data and Press conference by Federal Reserve Chairman Jerome Powell on Wednesday to know when the central bank might move towards lowering interest rates.
Higher-than-expected inflation data in the past has driven bitcoin prices lower because it creates uncertainty over when the Fed will cut rates and by how much.
The Fed’s anti-inflationary campaign of raising interest rates has pushed bond yields higher, making them more attractive to investors, not only because of the yields, but also because bonds typically carry less risk.
Outside of bitcoin, meme-based tokens on Solana, especially those backed by various celebrities, continue to attract attention from investors who prefer to bet on small-cap crypto assets. In particular, MOTHER, which has the support of Australian artist Iggy Azalea, has gone from less than $0.01 to more than $0.20 in the last two weeks, meaning its market cap is rising at almost 200 million dollars.