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Fed Pause Sparks Fire Under Bitcoin Funds | ETF News

2 mins
Updated by Ann Maria Shibu
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In Brief

  • Bitcoin spot ETFs saw major inflows and outflows this week, driven by investor reactions to macroeconomic shifts and the Fed’s rate decision.
  • On Wednesday, a $142.31 million inflow followed the Fed's rate pause, with Ark Invest and Fidelity seeing the biggest gains.
  • BTC’s price surged to $98,888, driven by increased long positions, while options market sentiment shifted to a bullish outlook.
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Bitcoin spot ETFs have experienced a rollercoaster week of inflows and outflows, largely driven by investors reacting to shifting macroeconomic cues. 

However, a renewed wave of optimism has swept through the markets following the US Federal Reserve’s decision to leave interest rates unchanged. This move appears to have reassured investors and reignited institutional appetite for BTC-backed funds. 

Bitcoin ETFs Bounce Back

The week started strong. On Monday, inflows totaled $425.45 million across BTC spot ETFs. Yet, this bullish momentum was interrupted on Tuesday as institutional investors pulled capital from the market ahead of the Federal Open Market Committee (FOMC) meeting. The pullback resulted in net outflows of $85.64 million.

However, the trend shifted on Wednesday, thanks to the Fed’s decision to hold interest rates. The announcement triggered a sharp rebound in investor confidence, fueling fresh inflows of $142.31 million into BTC ETFs. 

Total Bitcoin Spot ETF Net Inflow
Total Bitcoin Spot ETF Net Inflow. Source: SosoValue

On May 7, Ark Invest and 21Shares’ ARKB recorded the largest single-day inflow, totaling $57.73 million, bringing its total cumulative net inflows to $2.68 billion.

The second-largest daily inflow was recorded by Fidelity’s FBTC, which saw $39.92 million enter the fund. FBTC’s total historical net inflows now stand at $11.64 billion.

According to SosoValue, no fund recorded a net outflow on Wednesday. 

Options and Futures Signal Bitcoin Bulls in Control

The renewed optimism extends beyond inflows into ETFs. BTC is up 2% over the past 24 hours, and currently trades at $98,888. This price surge is accompanied by a positive funding rate, indicating an increase in leveraged long positions.

Bitcoin Funding Rate.
Bitcoin Funding Rate. Source: Coinglass

At press time, this is at 0.0042%. The funding rate is a periodic fee exchanged between long and short positions in perpetual futures contracts to keep prices aligned with the spot market. When positive like this, traders holding long positions pay shorts,  indicating that bullish sentiment dominates the BTC market.

However, it is key to note that despite this, BTC’s futures open interest has fallen by a modest 0.18% over the past day. This suggests that while traders are largely optimistic, some leveraged positions may have been closed, possibly to take profit as BTC soars. 

BTC Futures Open Interest.
BTC Futures Open Interest. Source: Coinglass

Meanwhile, traders have also caught the bullish virus in the options market. The demand for call options has surged, exceeding puts, indicating that traders are increasingly positioning for the upside.

BTC Options Open Interest.
BTC Options Open Interest. Source: Deribit

These trends suggest a growing conviction that BTC could break higher if macro conditions remain favorable.

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Abiodun Oladokun
Abiodun Oladokun is a Technical and On-Chain Analyst at BeInCrypto, where he specializes in market reports on cryptocurrencies from diverse sectors, including decentralized finance (DeFi), real-world assets (RWA), artificial intelligence (AI), decentralized physical infrastructure networks (DePIN), Layer 2s, and meme coins. Previously, he conducted market analysis and technical assessments of various altcoins at AMBCrypto, utilizing on-chain analytics platforms like Messari, Santiment...
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