Bitcoin ETF- Crypto Market Faces Losses as Bitcoin Drops Below $87,000
Bitcoin ETF– The cryptocurrency market had a difficult day on Tuesday, as Bitcoin (BTC) dropped to three-month lows, dipping below $87,000. This decline not only impacted Bitcoin but also caused a ripple effect throughout the broader market. However, the most significant shift occurred within U.S.-listed spot Bitcoin exchange-traded funds (ETFs), where investors withdrew funds at an unprecedented rate.
On Tuesday, the 11 spot Bitcoin ETFs saw a cumulative net outflow of $937.78 million, marking the largest single-day redemption since these funds began trading in January 2024. According to data from SoSoValue, Fidelity’s FBTC ETF experienced the highest outflow, with $344.65 million withdrawn, followed by $164.37 million in redemptions from BlackRock’s IBIT. Other funds registered smaller outflows, each under $100 million.
CME Bitcoin Futures Impact the ETF Market
A key factor driving this withdrawal trend is the decline in the premium in CME-listed Bitcoin futures, which has eroded the appeal of the cash and carry arbitrage strategy. The yield offered by these BTC and ETH carry trades has dropped significantly, now barely surpassing the yield of U.S. 10-year Treasury notes, which were yielding 4.32% at the time of writing.
Declining Premiums in Futures Contracts
Velo Data reports that the annualized one-month premium on CME Bitcoin futures dropped to just 4% on Tuesday, the lowest in nearly two years, a sharp decline from nearly 15% in December. Similarly, the premium in ether futures also saw a significant drop, now hovering around 5%. Consequently, the spot ether ETFs in the U.S. witnessed a total outflow of $50 million on Tuesday.
These developments signal changing investor behavior, with funds flowing out of Bitcoin and Ethereum ETFs due to less favorable market conditions for futures-based strategies. While Bitcoin remains a volatile asset, it’s important for investors to stay informed and carefully consider how market shifts, like the decline in futures premiums, could affect investment strategies in the short term.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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