Wall Street’s response to federal policy

Bitcoin ETFs (exchange-traded funds) broke a 15-day streak of positive inflows on Thursday, recording the biggest one-day inflow since its launch in January. Ethereum ETFs shared the sentiment, breaking an 18-day streak of positive inflows.

It comes as markets continue to recover from comments by Federal Reserve Chairman Jerome Powell on Wednesday.

Bitcoin ETF spending set a new high at $672 million.

Bitcoin ETF outflows hit a new high of $671.9 million on Thursday, according to data from Farside Investors. This beat the record negative outflow of $564 million on May 1, 2024.

According to the data, Fidelity's FBTC fund led sales of up to $208.5 million in December 19 trading. In particular, this marked the highest level in the fund's performance since January 11, when these financial instruments were introduced to the market.

Greyscale's BTC fund has recorded withdrawals of $188.6 million, marking its worst performance since launch. Ark Invest's ARKB contributed more than $108 million to its total spending in Thursday's trading session. BlackRock's IBIT fund, along with Franklin Templeton's EZBC and Valkyries' BRRR, recorded neither outflows nor inflows.

Farside data also shows a similar view on the Ethereum ETF market, which broke the 18-day positive flow and reached $60.5 million. Crypto enthusiast Mark Cullen linked to the news that the Fed is not allowed to hold BTC, a position that could jeopardize the prospects of Bitcoin reserves in the US.

“U.S. BTC ETFs seem to be all interested after the news that the FED will not be allowed to hold BTC. So does this mean there is no strategic Bitcoin reserve fund? Total expenses net of -$671.9 million,” Cullen shared.

Indeed, during the press conference on Wednesday, Jerome Powell suggests that the Federal Reserve will not allow Bitcoin, they can only advise and control. The chairman of the Fed also hinted at not maintaining interest rate cuts until 2025 as previously expected. This shift in rhetoric comes after data showed that US inflation is not slowing as much as Federal Reserve officials had hoped.

Against this backdrop, the massive outflow on December 19 may represent a reaction from Wall Street investors, who expect only two rate cuts next year.