U.S. Bitcoin ETFs Bleed Record $563M Even as Fed’s Powell Rules Out Rate Hike

On Wednesday, investors pulled a record $563 million from U.S.-based spot bitcoin ETFs.

Fidelity’s FBTC led the outflows, followed by GBTC, ARKB and IBIT.

Powell ruled out a rate hike as the next move, triggering a brief rally in BTC.

Investors dumped U.S.-based spot bitcoin {{BTC}} exchange-traded funds (ETFs) at the fastest pace on Wednesday, even as Federal Reserve (Fed) chairman Jerome Powell ruled out a rate hike.

According to data sources Farside Investors and CoinGlass, 11 ETFs saw cumulative net outflows of $563.7 million; This was the largest outflow since the funds began trading on January 11 and continued a five-day losing streak. Investors have withdrawn nearly $1.2 billion from ETFs since April 24.

Fidelity’s FBTC led outflows on Wednesday, losing $191.1 in withdrawals. This could be worrying for bulls, as FBTC and BlackRock’s IBIT consistently pulled in funds in the first quarter, more than offsetting regular large outflows from the relatively costly Grayscale ETF (GBTC).

Fidelity’s FBTC recorded the biggest outflow on Wednesday. (Farside Investors)

On Wednesday, GBTC witnessed the second largest outflow of $167.4 million, followed by ARKB $98.1 million and IBIT $36.9 million. While Powell’s clearly dovish approach put a floor under risk assets including Bitcoin, other funds also lost money. The dovish stance is the stance in which the central bank prefers employment and economic growth over excessive liquidity tightening.

The Fed left its benchmark interest rate unchanged at 5.25% to 5.5% on Wednesday, as expected. During the press conference, Powell said the economy was too strong to cut interest rates while pushing back against fears of new interest rate hikes or liquidity tightening fueled by recent disappointing inflation numbers.

The Fed also said it would significantly reduce its alternative liquidity tightening program, called quantitative tightening (QT), starting in June. Meanwhile, the US Treasury announced a program to buy back billions of dollars of government debt for the first time in more than two decades, in an effort to increase liquidity in the bond market.

Like other risk assets, Bitcoin is sensitive to expected changes in liquidity conditions and witnessed a brief rally from $56,620 to $59,430 following Powell’s comments. The yield of 10- and 2-year Treasury bonds also fell along with the dollar index.

However, BTC’s rise was short-lived and Bitcoin fell to $ 57,300 at the time of writing. Earlier this week, Asia’s first spot bitcoin and ether {{ETH}} ETFs debuted in Hong Kong with disappointing volumes, worsening sentiment in the crypto market.