CoinFactiva Analysts: ETF Outflows Trigger Correction in the Crypto Market

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According to CoinFactiva analysts, last week, the capitalization of altcoins dropped by 3.5% to $1.07 trillion, while Bitcoin’s market cap fell by 4.4% to $1.31 trillion. The primary negative factor in crypto industry was the outflow from U.S. Bitcoin ETFs, totaling $581 million during the same period.

Among the funds, Grayscale’s GBTC performed the worst, with an outflow of $274.3 million. This investment loss is attributed to the conversion of the fund from a trust to a spot ETF and its high management fee of 1.5%. However, the combined outflows from Fidelity and Ark Invest surpassed those of Grayscale this time.

In their latest investor note, JPMorgan analysts stated that the impact of inflows into spot ETFs has been overestimated. They believe that the majority of the figure is due to funds moving from cryptocurrency exchanges rather than significant external demand. Since the beginning of the year, the net inflow into Bitcoin ETFs has been 262,000 BTC, while crypto exchanges have lost 190,000 BTC during the same period.

However, such a comparison is overly simplistic and does not account for the record interest of institutional investors in new funds. According to 13F reports from companies with assets under management (AUM) exceeding $100 million, their combined interest reached $3.5 billion, or 29% of the total inflow in just the first quarter. The total number of such participants was 414, significantly higher than the interest shown in other funds launched this year.

Currently, a prolonged consolidation is being observed, largely driven by the desire of short-term holders (coins held for less than six months) to lock in profits. This explains the outflows from FBTC and ARKB funds last week.

The nearest support level is the realized price of this group (STH), which stands at $62,400.

From a macroeconomic perspective, the Federal Reserve’s revision of plans to cut the key interest rate has had a restraining effect. Previously, FOMC members planned three rate cuts in 2024 (starting in the summer), but now only one is expected. Economists believe that the rate change will not occur until September at the earliest.

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