Markets
Why Bitcoin Remains Below $70,000 Despite Big ETF Flows
Key points
- The second-largest daily inflow into spot bitcoin ETFs failed to support bitcoin prices above $70,000. Analysts say hedge funds and commodity traders are engaging in price arbitrage by buying ETFs and selling CME bitcoin futures.
- Robinhood has announced a deal to purchase cryptocurrency exchange Bitstamp.
- Semler Scientific is taking a leaf out of the Microstrategy playbook and acquiring bitcoin.
- Market watchers will be keeping an eye on CPI data and remarks from Fed Chair Jerome Powell for indications of when the central bank might cut rates.
Bitcoin prices remained somewhat capped last week, although they fell sharply below the $70,00 mark on Friday, after rising to over $71,000 earlier in the week.
The second-largest daily inflow into spot bitcoin exchange-traded funds failed to maintain bitcoin’s price momentum as traders engaged in arbitrage to make money from the difference between spot and futures prices. Robin Hood (HOOD) hit the headlines with its acquisition of Bitstamp in a bid to expand its operations overseas. Additionally, another publicly traded company has decided to leverage bitcoin as a treasury asset.
Bitcoin ETFs see the second strongest daily flows
On Tuesday, U.S. spot bitcoin ETFs recorded the second-highest daily net inflow, reaching $886.6 million, according to data from Farside Investors. Driving the inflows was Fidelity’s Wise Origin Bitcoin Fund (FBTC), contributing $378.7 million, followed by BlackRock’s iShares Bitcoin Trust (IBIT) with $274.4 million.
This inflow marked sixteen consecutive days of net inflows for these ETFs, which has since been extended to nineteen days. It was an overall strong week for bitcoin ETF inflows, as nearly $1.6 billion in flows entered the market from Tuesday to Thursday alone.
Cumulative net inflows for US Bitcoin ETFs have now reached $15.6 billion, with IBIT outpacing the Grayscale Bitcoin Trust (GBTC) as the largest operator on the market. Despite the strong inflows, the price of bitcoin has only touched a new all-time high and has not yet reached the $73,000 mark seen in March.
Traders were bullish on spot bitcoin ETFs when they began trading in January, with inflows fueling a rally in bitcoin prices. However, this trend may change as traders now bet on arbitrage.
Hedge funds and commodity traders buy spot bitcoin ETFs while selling CME futures, or basic negotiationaiming to profit from the futures market’s premium over spot prices, according to BitMEX Research.
What does Bitstamp Buy mean for Robinhood
Robinhood’s $200 million acquisition Cryptocurrency exchange Bitstamp accelerates its foray into digital assets, especially outside the United States. This expansion comes about six months after Robinhood began offering cryptocurrency trading to customers in the European Union.
Bitstamp holds 50 active licenses and registrations worldwide, positioning Robinhood to compete directly with industry leaders such as Binance AND Coinbase (CURRENCY). Bitstamp’s large-scale spot exchange, widely used in Europe and Asia, offers over 85 tradable assets, including staking and lending services, and is set to drive Robinhood Crypto’s growth as a first institutional asset.
“The acquisition of Bitstamp is an important step in the growth of our cryptocurrency business,” said Johann Kerbrat, CEO of Robinhood Crypto. “Bitstamp’s long-standing and highly trusted global exchange has demonstrated resilience through market cycles.”
Even though the deal closes in the first half of next year, Robinhood’s cryptocurrency business is thriving, generating about a fifth of the company’s first-quarter net revenue, despite regulatory challenges in the United States.
Semler Scientific follows Microstrategy’s Bitcoin Playbook
Scientific Semler (SMLR) announced last Thursday that it will bolster its existing bitcoin holdings with a recent $17 million purchase, while also planning to raise $150 million. In May, the healthcare company announced a $40 million bitcoin acquisition, which subsequently boosted its shares by about 25%. The company now owns 828 bitcoins in total.
Semler Scientific has strategically diversified by incorporating bitcoin into its business strategy. CEO Doug Murphy-Chutorian said: “Semler remains focused on our dual strategy of expanding our healthcare business and acquiring and holding bitcoin.”
Semler’s recent announcement aligns with the broader trend of publicly traded companies holding significant amounts of bitcoin, a combined total of 308,688 BTC worth approximately $21.4 billion, according to Bitcoin Treasuries. Microstrategy (MSTR) is the most notable example here, with nearly $15 billion in bitcoin, but others include Tesla (TSLA) and Block (m2).
Semler shares jumped immediately after the announcement and are trading up about 27% from last Thursday’s close. Microstrategy shares have more than doubled since the start of the year, as its bitcoin portfolio has benefited from rising bitcoin prices.
What to expect from the markets this week
Market watchers, across traditional financial and cryptocurrency markets, will be keeping an eye on the Consumer Price Index (CPI) data e Federal Reserve Chairman Jerome Powell’s press conference on Wednesday for indications of when the central bank might move towards cutting interest rates.
Hotter-than-expected inflation data in the past has led to a decline in bitcoin prices as it creates uncertainty about when the Fed will lower rates and by how much.
The Fed’s anti-inflation campaign of raising interest rates has pushed bond yields higher, making them more attractive to investors, not only because of the yields but also because bonds tend to carry less risk.
Outside of bitcoin, tokens based on Solana memes, especially those endorsed by various celebrities, continue to attract the attention of investors who prefer to bet on small-cap crypto assets. Notably, MOTHER, which has the backing of Australian artist Iggy Azalea, has gone from under $0.01 to over $0.20 in the past two weeks, meaning its market capitalization is nearly $200 million of dollars.