Blockchain
Bitcoin Price Fluctuates as Bitcoin ETFs See Outflows
Key points
- Bitcoin’s price fell below $57,000 from around $64,500 last week, before recovering again to the $64,000 level on Saturday.
- Amid the price decline, the bitcoin ETF spot market recorded its largest single-day outflows ever on Wednesday.
- Binance founder and former CEO Changpeng Zhao has been sentenced to four months in prison for violations of the Bank Secrecy Act during his time as head of the cryptocurrency exchange.
- In its Q1 2024 shareholder letter, fintech company Block revealed that it will allocate 10% of its monthly gross profits from bitcoin-related products to bitcoin purchases in the future.
Bitcoin (Bitcoin) the price fell below $57,000 on Wednesday from around $64,500 last Monday before recovering in what has been a strange week. Investors appear to have soured on spot bitcoin exchange traded funds (ETFs) last week, with Wednesday seeing record single-day net outflows.
Beyond the price fluctuations of bitcoin, the last week was characterized by the ruling of Binance founder and former CEO Changpeng Zhaotogether with the fintech company Block’s (m2) announcing Thursday that it will buy more bitcoin with a portion of its profits.
Bitcoin ETFs See Record Outflows
Spot Bitcoin ETFs ended the week with investors taking out more money than expected, thanks to a record net outflow of $563.7 million on Wednesday, amid price fluctuations for the underlying cryptocurrency.
That day, Blackrock’s iShares Bitcoin Trust (IBIT) recorded outflows for the first time since its trading debut on Jan. 11, with a net outflow of $36.9 million from the fund. Fidelity Wise Origin Bitcoin Fund (FBTC) also saw record outflows from the fund of $191.1 million in a single day last week.
Up until now, these ETFs have been the two most popular options among new investors seeking exposure to spot market for bitcoin ETFs.
But that wasn’t the only surprise when it came to spotting bitcoin ETF flows last week.
Grayscale Bitcoin Confidence (GBTC), the largest bitcoin ETF by assets and the target of the largest and most consistent outflows so far, recorded its first net inflows on Friday, according to data from Farside Investors. GBTC saw net inflows of $63 million that day, but has seen a net outflow of $17.46 billion from the fund since Jan. 11. One of the main reasons for the shock that accompanied flows into GBTC was that the spot bitcoin ETF is still at a much higher value. commission rate compared to other options on the market at 1.5%.
Despite the outflows, some analysts have suggested that investors may not need to be overly concerned. Demand for spot bitcoin ETFs has been credited for bitcoin’s rally earlier this year, but that may not be the only influence on bitcoin prices going forward, Coinbase analysts said.
“While this indicates a slowdown in capital inflows to the asset class via the ETF product, we believe ETF flows (while important) only drive a portion of BTC price discovery, given the global and deeply liquid markets on centralized exchanges (CEX)“Coinbase analysts David Han and David Duong said in a commentary Friday.
Former Binance CEO receives four months in prison
Zhao, former CEO of Binance he received a four-month prison sentence in a Seattle courtroom Tuesday. In November, Zhao resigned from his position as head of the world’s largest cryptocurrency exchange after pleading guilty to violating U.S. laws Banking secrecy law. This guilty plea led Binance to pay approximately 4.3 billion dollarsmarking one of the most significant corporate resolutions in history resulting in criminal charges against an executive.
Zhao’s relatively short prison sentence was compared to that of former FTX CEO Sam Bankman-Fried, who he received a 25-year sentence related to the fraudulent use of customer funds. Of course, the key difference in these cases is that Zhao was not accused of misusing client funds.
The founders of the Samourai Wallet bitcoin wallet were also recently arrested on allegations related to insufficient anti-money laundering standards.
Block to invest 10% of Bitcoin product profits in Bitcoin
To blockthe company behind fintech products like Cash App and Square, said it will invest 10% of its gross profit from its bitcoin-related businesses to buy more bitcoins each month.
For context, Block’s first quarter gross profit from bitcoin via Cash App increased 59% year-over-year to $80 million. Cash App’s bitcoin revenue from sales to customers for the period totaled $2.73 billion, up 26% from the same period a year ago. However, only about 3% of the company’s resources are deployed on Bitcoin-related projects.
“We were one of the first public companies to put Bitcoin on our balance sheet – we invested $220 million in Bitcoin and that investment grew about 160% to $573 million at the end of the first quarter,” said Jack Dorsey , CEO of Block. said in the letter.
What to expect from the markets this week
Investors and market observers will be looking for further clues on any further regulatory actions in the cryptocurrency markets.
Monday started with Robinhood (HOOD) disclosing that Wells received a notice from the Securities and Exchange Commission (SEC) in early May regarding his cryptocurrency activity and that they may face enforcement action by the regulator. The action could be similar to those taken by the SEC against Coinbase (CURRENCY) and Kraken last year referred to their registration as a broker-dealer for the sale of crypto tokens that it considers unregistered securities.