The newly launched spot Bitcoin (BTC) exchange-traded funds (ETFs) experienced their first week of net outflows from March 18 to March 22. A total of $888 million was withdrawn from the spot ETFs, marking a significant shift from the previous week’s $2.57 billion inflow. This has led to speculation about the sustainability of Bitcoin’s rally to $70,000 on March 25.
Bitcoin can rally in the absence of spot BTC ETF inflows
Some market participants had argued that institutional inflows were a key driver behind Bitcoin’s all-time high of $73,755 on March 14, casting doubt on the 9% gains seen between March 23 and March 25. Further raising concerns is the fact that this rally occurred while the S&P 500 index was unable to maintain its all-time high of 5,260 set on March 21.
Source: venturefoundΞr
Analyst venturefoundΞr, on March 20, suggested that Bitcoin was facing a reality check after FOMO from ETF investors drove it to a new high before the halving, effectively “trapping” those who bought at the peak. While a 15% gain from March 20 to March 25 shouldn’t dismiss bearish concerns outright, Bitcoin’s market behavior suggests that its bullish momentum isn’t solely reliant on spot ETF inflows.
Some traders believe that the recent approval of a $1.2 trillion spending package by the United States on March 23 serves as a key positive catalyst for Bitcoin. This is particularly true in light of the U.S. Federal Reserve’s forecast model predicting three interest rate cuts throughout 2024. With the U.S. deficit expected to reach $1.6 trillion in 2024, the pressure on government debt repayment intensifies as interest rates hover above 5.25%.
The concurrent rise to all-time highs of scarce assets like gold, Bitcoin, real estate, and the stock market suggests a weakening U.S. dollar. Ultimately, the performance of the North American currency against the euro and the British pound is less relevant as investors seek refuge from fiat currency devaluation.
Concluding that Bitcoin’s price will continue its upward trajectory due to monetary expansion might seem premature. However, bears arguing that the U.S. fiscal trajectory will lead…
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