Bitcoin Slides Amid Anticipated Inflation Uptick and ETF Outflows


After briefly cresting the $72,000 mark on April 8, Bitcoin has once more been assailed by a downward slide in its value; a development that has unavoidably cast a pall of uncertainty over the crypto titan. Analysts suggest that this price slump can be traced to a multitude of factors, imparting a bearish tenor to the once unassailable cryptocurrency.

Looming on the horizon, set to be unveiled on April 10, are the figures from the March Consumer Price Index (CPI). Some financial savants posit that this report could herald an uptick in inflation. This may consequently spur the Federal Reserve to adopt a more aggressive approach to interest rates; a move which could sting Bitcoin and send ripples through the broader crypto market.

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This could potentially shed light on the recent downward thrust experienced by Bitcoin, as anxious crypto investors retreat to the wings in anticipation of the CPI report. However, all may not be lost. If the inflation rates turn out favorable, it could rekindle investors’ trust in the economic climate and bestow a much-craved bullish disposition upon the crypto market.

Looking back at the earlier part of the year, inflation data for January and February surpassed predictions. It’s worth noting that any exceedance of expectations in last month’s data might have implications far-reaching into the long term. Up until now, the Fed has firmly held the reins on the interest rates, maintaining them at around 5.3%, sparking a glimmer of hope at the year’s outset that there might be upcoming rate cuts.

With inflation stubbornly poised well above the Central Bank’s 2% target, the mounting concern is that the Federal Reserve may be driven to implement radical measures. This would hardly bode well for Bitcoin, especially given the optimistic forecasts made by various crypto analysts, many of whom premised their bullish stance on a series of potential rate cuts over the 2021 trading year.

Another event muddying the waters is Spot Bitcoin ETFs’ recent stumble to the red. These investment instruments registered a net outflow on the 8th and 9th of April, leading to a sizeable Bitcoin offload into the market. Notably, these outflows were sourced largely from the Grayscale Bitcoin Trust (GBTC), which logged an outflow of $303.3 million and $154.9 million on the respective dates.

In comparison, other Spot Bitcoin ETFs did not generate remarkable inflows during this time, a clear indication of their slow-paced demand. To illustrate, 6 out of the 10 Spot Bitcoin ETFs (excluding GBTC) reported no inflows on April 9, while 5 out of 10 had no influx on April 8. BlackRock’s iShares Bitcoin Trust (IBIT) similarly marked a comparatively low inflow of only $21.3 million that day.

As it stands, Bitcoin is currently trading at around $69,300, marking a drop of over 2% in the last 24 hours, based on data retrieved from CoinMarketCap. With the global financial pulse at its finger-tips, only time will tell the fate of this tech-age currency.