"What Happened to Bitcoin ETF?" Newsletter: Bitcoin Nears Key Support as ETF Outflows Surge

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Welcome to "What Happened to Bitcoin ETF?”

In this week's edition, we will cover the key highlights from September 2nd to September 6th. We provide a concise and engaging analysis of the Bitcoin ETF market and review the overall performance of the Bitcoin market during this period.

Weekly Bitcoin ETF in Numbers

• Total AUM of Bitcoin ETFs (as of September 6th):

  $48,398,562,016 (Last week: $53,861,604,799)

  ₿901,821 (Last week: ₿914,821)

• Total Weekly Net Flow (September 2nd~September 6th):

  -$5,463,042,784 (Last week: -$2,413,362,233)

  -₿13,000 (Last week: +₿28,822)

• Top Weekly Performer:

  No ETFs Saw Inflows This Week.

• Worst Weekly Performer:

  Fidelity (FBTC): -₿7,218

1/ Total AUM and Bitcoin Price Dynamics:

The AUM of all Bitcoin ETFs has taken a significant hit, falling below the $50 billion mark. This drop in assets under management (AUM) reflects a concerning trend in the Bitcoin ETF space, particularly for spot Bitcoin ETFs, which have seen continuous outflows over the past weeks.

The prior week was marked by outflows totaling $277.2 million, and unfortunately, the situation only worsened during the most recent four-day trading week. Significant withdrawals were recorded on Tuesday ($287.8 million), Wednesday ($37.2 million), Thursday ($211.1 million), and Friday ($170 million). Fidelity’s FBTC led the losses for three of those four days.

In total, $706.1 million exited US spot Bitcoin ETFs last week, stretching the negative streak to eight consecutive trading days, making it the longest streak since the inception of these ETFs in mid-January. Overall, the outflows in the last two weeks have amounted to nearly $900 million.

This considerable drop in ETF AUM is closely tied to the downward trajectory of Bitcoin’s price. Over the past week, Bitcoin’s price declined by 7%, aligning with the outflows from the ETFs. The attached price chart visually depicts the latest action, showing Bitcoin trending towards a key support level of $54,000. The green trend line represents the critical support range that, if broken, could signal further downside toward the $40,000 level.

Additional context shows a direct impact from the latest US employment data. In August, non-farm payrolls only increased by 142,000, missing expectations of 161,000 and trailing the 12-month average of 202,000. This weaker-than-expected job growth, coupled with prior data revisions, triggered a broader market reaction, influencing Bitcoin’s drop post-announcement.

The next few days could be crucial for Bitcoin as it tests support, with continued ETF outflows potentially further exacerbating price volatility.

Fed Rate Cut Looms as Bitcoin Faces 17% Drop in One Day

US hiring in August rose but missed forecasts after downward revisions to the previous two months, intensifying the debate on how much the Federal Reserve should cut interest rates. Nonfarm payrolls increased by only 142,000, marking the lowest three-month average since mid-2020, as revealed by the Bureau of Labor Statistics on Friday. The unemployment rate dropped to 4.2%, the first decline in five months, signaling a reversal of recent layoffs.

Following the release of the jobs data, Fed Governor Christopher Waller stated that the latest figures “require action” and indicated he would support “front-loading rate cuts if that is appropriate.” Additionally, Sonu Varghese, a global macro strategist at Carson Group, remarked, “the labor market is clearly softening, and the Fed needs to step in to mitigate risks.” According to Varghese, this report solidifies the likelihood of a September rate cut, but the bigger question remains whether the Fed will take more aggressive steps.

Bitcoin experienced a significant drop on August 5, falling by 17% in a single day, highlighting the persistent 20% volatility levels that can emerge at any moment. The attached chart shows the rapid decline, with Bitcoin’s price dipping to $51,302 during this volatile period. This emphasizes the unpredictable nature of the market, especially as macroeconomic data continues to influence investor sentiment.

2/ Bitcoin ETF Weekly Flow:

Ending Holdings on September 6 (Weekly Change):

• IBIT (BlackRock): 357,436 BTC (-73 BTC)

• GBTC (Grayscale): 223,728 BTC (-3,134 BTC)

• FBTC (Fidelity): 171,132 BTC (-7,218 BTC)

• ARKB (Ark 21Shares): 43,640 BTC (-713 BTC)

• BITB (Bitwise): 36,080 BTC (-1,068 BTC)

• BTC (Grayscale Mini): 32,391 BTC (-152 BTC)

• HODL (VanEck): 10,775 BTC (-141 BTC)

• BRRR (Valkyrie): 8,753 BTC (-85 BTC)

• BTCO (Invesco Galaxy): 7,563 BTC (-271 BTC)

• EZBC (Franklin Templeton): 6,525 BTC (-145 BTC)

• BTCW (WisdomTree): 3,654 BTC (+0 BTC)

• DEFI (Hashdex): 144 BTC (+0 BTC)

Total: 901,822 BTC (-13,000 BTC)

3/ Looking Ahead:

Bitcoin ETFs Brace for Volatility Amid Inflation Data and Political Shifts

The US Bitcoin ETFs are on a challenging trajectory, with ongoing outflows casting uncertainty over the near-term future of the market. Over the past eight days, investors have pulled $1.2 billion, reflecting growing caution amid global economic concerns. Looking ahead, the focus shifts to whether this trend will reverse as key economic events unfold.

Bitcoin’s price volatility is likely to remain high as the cryptocurrency continues to be influenced by macroeconomic conditions, particularly the upcoming US consumer-price data release on Wednesday. This data could set the stage for Federal Reserve policy shifts, shaping market sentiment. If inflation eases more than expected, the Fed may accelerate rate cuts, potentially sparking a Bitcoin recovery. Conversely, stubborn inflation could lead to more conservative monetary easing, maintaining pressure on risk assets like cryptocurrencies.

Political factors are also at play, with the upcoming Trump-Harris debate possibly adding volatility to the markets. As Donald Trump’s pro-crypto stance strengthens his position in the presidential race, this could lead to greater market optimism around Bitcoin’s future regulatory landscape.

In the coming weeks, Bitcoin’s price is expected to fluctuate within the $53,000 to $57,000 range, though any surprise in inflation data or shifts in political winds could push the asset beyond this band. With Bitcoin’s long-term fundamentals remaining strong, any easing in macroeconomic pressure could provide the fuel for the next rally. Traders should brace for potential short-term volatility, but eyes are on the horizon for signs of a market rebound.

4/ 🔥What’s Trending Now?:

Bitcoin Takes the Spotlight at KBW 2024

Last week, Korea Blockchain Week (KBW) was the center of attention in the crypto world, with over 400 official side events, making it the largest KBW ever. Among the many discussions and innovations, Bitcoin took center stage, particularly at BTCON, a new conference focused entirely on Bitcoin. One of the major topics was Bitcoin Staking and DeFi, highlighting the growing efforts to push Bitcoin beyond its traditional boundaries.

While Bitcoin lacks the native staking mechanisms and smart contract functionality that drive DeFi on other chains, innovators at BTCON are working on overcoming these limitations. The discussion around Bitcoin’s role in DeFi is gaining traction as more people question the future of altcoins, especially with concerns about the potential end of the altcoin bull market. Even Ethereum, despite its leadership in the altcoin space and the launch of its spot ETF, has underperformed against Bitcoin, signaling a shift in focus back to the original cryptocurrency.

The Bitcoin trend is clear: many are now looking to Layer 2 and Layer 3 solutions as the next big thing for scaling Bitcoin. Though scalability and Bitcoin’s place in the larger Web 3.0 conversation are still emerging topics, it’s only a matter of time before Bitcoin’s layers dominate future discussions. Some even suggest that, as Bitcoin solidifies its position as the “hardest money” ever created, KBW could evolve to stand for “Korea Bitcoin Week.”

For now, Bitcoin continues to stand strong, positioning itself as the foundation of the digital economy while interest in altcoins appears to be waning.

5/ This Week’s Bitcoin Mindset:

1. Why Invest Elsewhere? Bitcoin's 569,772% Says It All!

2. Bitcoin: Aging Like Fine Wine – 6x Growth Every 40% in Age!

🍫CRYPTO CRUMBS ON THE TRAIL 🍫

Dive into this week's crunchy bites of important news, serving up the freshest updates and insights from the crypto world.

Here's what's on the menu:

1. Arthur Hayes predicts Bitcoin rally after closing short position

   Bitcoin could rally on a potential liquidity injection in the US, according to Hayes, who closed his weekend short BTC position.

2. Could Electricity for Bitcoin Mining Become Energy for AI?

   U.S. technology companies are increasingly purchasing or leasing energy assets held by bitcoin miners.

3. Legendary Trader Peter Brandt Says Bitcoin Hinting at ‘Massive’ Outperformance of Gold

   Veteran commodities trader Peter Brandt says that Bitcoin (BTC) is flashing hints that it is gearing up to massively outperform gold.

4. Bitcoin Historical Cycle Predicts Massive Rally in 2025: Details By U.Today

   U.Today - According to a recent analysis by on-chain analytics firm IntoTheBlock, Bitcoin's historical cycles suggest a significant rally...

5. ‘There Is No Demand Growth’: CryptoQuant Analyst Outlines Factors Behind Bitcoin (BTC) Slump

   A lack of demand growth is keeping Bitcoin's (BTC) price down, according to the head of research at the digital asset analytics firm...

That’s it for today; stay tuned for more updates and insights in our next edition!

Stay charged,

SmashFi Team

P.S. - Follow me on X (@brianhoonjong) for daily doses of insightful updates on Bitcoin ETFs and beyond! 🚀🐦

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“What Happened to Bitcoin ETF?” Newsletter: Dissecting the daily crypto craze with sharp insights and electrifying updates.

Disclaimer: This newsletter is for the brainy and the brave. It's for informational purposes only and not a substitute for investment advice. Always do your own research.