Spot Bitcoin exchange-traded funds experienced a sharp drop in inflows on Jan. 7 as Bitcoin fell 5%, driven by rising expectations of a more hawkish approach from the Federal Reserve.

Bitcoin, the world’s largest cryptocurrency, surged past $102,000 yesterday, sparking renewed optimism among investors anticipating a market rally ahead of President-elect Donald Trump’s upcoming inauguration.

However, the gains were short-lived as Bitcoin dropped by 5.7% within 24 hours, weighed down by rising U.S. bond yields and investor caution ahead of key economic updates, including the Federal Reserve’s meeting minutes and nonfarm payroll data.

The increase in bond yields has fueled expectations of a more hawkish stance from the Federal Reserve. Officials have already signaled plans for only two interest rate cuts in 2025, fewer than previously anticipated. Investors are now awaiting the Fed’s meeting minutes, set to be released on Wednesday, Jan. 8, for more clarity on policymakers’ deliberations.

Further pressure on Bitcoin came from a U.S. Labor Department report revealing job vacancies had climbed to a six-month high, driven by growing demand in the services sector.

It precedes the crucial nonfarm payroll report scheduled for Friday. A stronger-than-expected jobs report could solidify expectations of prolonged Fed tightening, as a resilient labor market may continue to fuel inflationary pressures.

Bitcoin ETF inflows plunge by 94%

The falling Bitcoin price resulted in inflows of just $52.9 million across the 12 Bitcoin ETFs on Jan. 7, as expectations of a hawkish stance from the Federal Reserve dampened risk-on sentiment among investors. Notably, this figure represents a 94% drop compared to the $987 million inflows recorded the previous day.

According to data from SoSoValue, BlackRock’s IBIT was the only BTC ETF to record an inflow on Tuesday. The asset manager’s spot Bitcoin ETF drew in $596.11 million of inflows managing to offset the collective outflows seen from the other BTC ETFs.

ARK and 21Shares’s ARKB logged the highest outflows of the day with $212.55 million exiting the fund. Grayscale’s two Bitcoin ETFs tickered GBTC and BTC also contributed to the negative momentum with $125.45 million and $113.85 million outflows respectively.

Fidelity’s FBTC reported an outflow of $86.29 million while Franklin Templeton’s EZBC saw a more modest outflow of $5.58 million. The remaining BTC ETF saw “0” flows on the day.

Meanwhile, the daily trading volume for these investment products stood at $4.62 billion on Jan. 7 a jump from the $3.96 billion witnessed a day before.

AT press time Bitcoin (BTC) was exchanging hands at $96,145 per coin.

BlackRock’s iShares Bitcoin ETF (IBIT) recorded over $597 million in inflow on Tuesday. The BlackRock Bitcoin ETF saves the day for the bleeding crypto market after investors turned cautious with strong US JOLTS job openings and ISM Services PMI data.

The spot Bitcoin ETF in the United States saw a net inflow of $53.46. Bitcoin ETFs by Fidelity, Bitwise, Ark 21Shares, Franklin Templeton, and Grayscale recorded outflows.

BlackRock Bitcoin ETF Saw Inflow Despite Crypto Market Crash

BlackRock’s iShares Bitcoin ETF (IBIT) purchased 6,078 BTC worth $208.7 on January 7, while miners only mined 450 new BTCs. IBIT recorded an inflow of $597.18 million, as per Trader T data.

This makes the third consecutive inflow into IBIT despite a major selloff in the crypto market. Notably, US Bitcoin ETF saw an inflow of $978.6 million on Monday, sparking optimism as the flagship crypto soared past the $102K mark.

Meanwhile, Fidelity’s FBTC, Bitwise’s BITB, and Ark Invest’s ARKB saw outflow of $86.29 million, $113.85 million, and $212.55 million, respectively. Also, Franklin EZBC saw a $5.58 million in outflow.

Grayscale’s GBTC also witnessed an outflow of $125.45 million. Flows were zero for Invesco, Valkyrie, VanEck, and Grayscale Mini.

According to Farside Investors, the total net inflow for Bitcoin spot ETFs reached $52.4 million. The iShares Bitcoin Trust by BlackRock saw a net inflow of $596.1 million. Whereas, other ETFs experienced varying degrees of outflow.

Bitcoin and Crypto Market Crash On Macro Concerns

According to the U.S. Bureau of Labor Statistics, the JOLTS jobs openings increased by 259,000 to 8,098 million in November 2024, Also, ISM Services PMI came in higher than expected, which shows the resilience of the U.S. economy currently. This caused Bitcoin price to crash by more than 5%.

In fact, the US dollar index (DXY) holds its advance above 108.50 today, after a two-day low move that caused a recovery in Bitcoin price. Also, the 10-year US Treasury yield increased to a 35-week high of 4.68%. The strong US economic data reduced expectations for further rate cuts by the Federal Reserve.

Whereas, BTC price continues to fall despite better performance by BlackRock Bitcoin ETF. The price currently trades at $96,259. The 24-hour low and high are $96,132 and $102,022, respectively. Furthermore, the trading volume has decreased by 23% in the last 24 hours.

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Varinder Singh

Varinder has over 10 years of experience and is known as a seasoned leader for his involvement in the fintech sector. With over 5 years dedicated to blockchain, crypto, and Web3 developments, he has experienced two Bitcoin halving events making him key opinion leader in the space.

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Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.