A Market in Flux
Bitcoin is experiencing its worst month since the collapse of FTX, with prices down 14% in April. This decline follows a period of euphoria surrounding the launch of US exchange-traded funds (ETFs) for Bitcoin, which pushed the cryptocurrency to a record high of nearly $74,000 in March.
However, fading hopes for Federal Reserve interest rate cuts have dampened demand for risky investments, leading to a significant decrease in inflows to Bitcoin ETFs. As of April 29th, there has been a net outflow of $182 million from the 11 US spot ETFs, compared to $4.6 billion in net inflow in March.
The much-anticipated Bitcoin halving, which reduces the supply of new coins and historically acted as a price catalyst, had minimal impact on the market. Additionally, stocks of crypto mining companies have taken a hit, with Marathon Digital Holdings Inc. dropping 7.5%, Riot Platforms Inc. falling 5.6%, and Cleanspark Inc. slipping 7.7%.
The recent launch of Bitcoin and Ether spot ETFs in Hong Kong also failed to inspire investor confidence. The six new ETFs saw a combined trading volume of only $11 million in their first session, a far cry from the $4.6 billion debut volume of the 10 US spot-Bitcoin products.
Analysts believe that the tepid demand from Hong Kong points towards more volatility ahead. They also highlight that the inflows from the Hong Kong ETFs are unlikely to significantly alter the market trend, as they are estimated to be equivalent to only two days of inflows to BlackRock's Bitcoin spot ETF in February.
Overall, Bitcoin is facing a challenging period as investor sentiment shifts and regulatory uncertainties remain. The coming months will be crucial in determining the future trajectory of the cryptocurrency market.