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Bitcoin ETF inflows plummeted 68% last week, as the sharp decline in Bitcoin ETF inflows coincided with the Federal Reserve’s interest rate decision and growing market fears surrounding Deepseek, a Chinese AI competitor to OpenAI’s ChatGPT.
According to SoSoValue, the 12 spot Bitcoin ETFs in the U.S. attracted only $559.84 million in net inflows over the past week, a dramatic drop from the $1.76 billion recorded the week before. But what caused this pullback, and what’s next for Bitcoin ETF inflows? Let’s break it down.
The week kicked off with Bitcoin ETF outflows of $457.48 million between Jan. 27-31, as investors reacted to the rapid adoption of Deepseek. The AI platform, developed in China at a fraction of the cost of OpenAI’s ChatGPT, triggered widespread sell-offs in both traditional stocks and crypto assets.
Crypto markets took a major hit, with nearly $1 billion in liquidations on the day Deepseek’s impact became apparent.
Despite the turbulence, Bitcoin ETF inflows showed signs of recovery as investors awaited the Federal Reserve’s decision on interest rates. Inflows of $18.44 million and $92.09 million trickled in over two days, but market participants remained cautious.
As expected, the Fed kept rates steady at 4.25%-4.50%, leading to a bullish reaction in the crypto space. This decision fueled a 500% surge in Bitcoin ETF inflows, with a staggering $588.22 million entering the market on Jan. 30 alone.
As risk appetite improved, major Bitcoin ETFs saw a surge in inflows. BlackRock’s IBIT ETF led the charge, pulling in $321.5 million, reinforcing its dominant position in the Bitcoin ETF market.
On Jan. 31, Bitcoin ETF inflows remained strong at $318.56 million, with BlackRock again leading at $363.83 millionin new investments. Other ETFs, including ARK 21Shares’ ARKB ($35.59 million) and VanEck’s HODL ($5.76 million), also saw significant inflows.
However, not all funds benefited. Bitwise’s BITB and Grayscale’s GBTC saw continued outflows, with $56.03 millionand $30.59 million withdrawn, respectively.
Despite the recent volatility, industry experts remain optimistic about Bitcoin ETF inflows in 2025.
According to Matt Hougan, global head of research at Bitwise Asset Management, the 12 spot Bitcoin ETFs have already seen $35.2 billion in inflows in 2024. He predicts even stronger performance ahead, stating:
“While we will see significant month-to-month volatility in flows, we expect Bitcoin ETFs to end the year north of $50 billion.”
Other analysts echo Hougan’s bullish outlook. Crypto commentator Andrew Kang suggests that the Bitcoin ETF marketwill expand further, with traditional finance giants like Wells Fargo, Stifel, Raymond James, and UBS potentially launching their own BTC ETFs by the end of Q1 2025.
The road ahead for Bitcoin ETF inflows remains uncertain, but key factors will shape the market in the coming months:
Federal Reserve Policy: Any sign of a rate cut in 2025 could fuel another wave of inflows into Bitcoin ETFs.
Institutional Adoption: More major banks and financial institutions entering the Bitcoin ETF space could drive demand.
Regulatory Clarity: If the SEC greenlights additional Bitcoin ETFs, investor confidence could rise further.
For now, the crypto community will be watching closely to see if Bitcoin ETF inflows can sustain their recent momentum or if another market shakeup lies ahead.
The dramatic 68% drop in Bitcoin ETF inflows highlighted the fragility of investor sentiment in the face of macroeconomic uncertainty and tech disruptions like Deepseek. However, the market’s swift rebound following the Fed’s decision suggests strong underlying demand for Bitcoin ETFs.
With inflows projected to exceed $50 billion in 2025 and new players entering the space, the Bitcoin ETF market could be in for another breakout year. Get more from The Bit Gazette
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