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Bitcoin price rises on back of spot ETFs

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Matteo Greco, Research Analyst at Fineqia International writes that bitcoin (BTC) ended the week at approximately USD52,150, showing a notable 7.9 per cent increase from the previous week’s closing value of around USD48,300. 

Greco writes that the week began with robust price growth, with BTC reaching its peak trading price of around USD52,800 on Thursday, before stabilising over the weekend within the USD51,000 to USD52,000 range and ultimately closing slightly above USD52,000. 

Last week marked bitcoin’s return to trading above USD50,000 for the first time in over two years, signalling strong momentum following the approval of BTC ETFs Spot, Greco says. The last time BTC traded above USD50,000 was back in December 2021, immediately following its all-time high of USD69,000 in November of the same year. 

This period was retrospectively recognised as the onset of a significant downtrend that persisted throughout 2022, leading to a price decline to approximately USD16,000 by the end of that year, Greco writes.

Market momentum continued to be fuelled by the high demand for BTC ETFs Spot. Throughout last week, the cumulative net inflow into BTC ETFs totalled about USD2.3 billion, nearly doubling the USD1.2 billion recorded in the previous week, and accounting for almost half of the total net inflow since inception, which currently stands at roughly USD5 billion.

Net inflows have remained consistently positive for 16 consecutive trading days since January 26th. However, outflows from the Grayscale Bitcoin ETF (GBTC) saw a slight increase last week, reaching approximately USD625 million, marking a 50 per cent rise compared to the cumulative outflow of USD415 million recorded in the preceding week. This suggests an uptick in profit-taking by investors following the recent surge in BTC price.

Among the nine ETFs launched on January 11th, Blackrock Bitcoin ETF (IBIT) maintains its lead with over USD5 billion in assets under management (AUM), currently totalling around USD6.2 billion. 

Fidelity BTC ETF (FBTC) follows in second place with approximately USD4.5 billion AUM, while 21Shares & ARK Bitcoin ETF (ARKB) secures the third position with roughly USD1.5 billion AUM. Last week, a fourth ETF crossed the USD1 billion AUM milestone, with Bitwise Bitcoin ETF (BITB) reaching approximately USD1.2 billion AUM, Greco writes.

Trading volume remained robust, with the cumulative trading volume of BTC ETFs reaching about USD9.6 billion last week, boasting a daily average volume of over USD1.9 billion. Since January 11th, the cumulative trading volume has totalled USD45.3 billion, with an average daily volume of approximately USD1.7 billion. These figures indicate above-average trading volume for the week, underlining strong buy pressure and activity surrounding these ETFs, Greco writes.

Analysing the macroeconomic landscape, the upcoming Federal Open Market Committee (FOMC) meeting is now 30 days away. Market expectations suggest a 90 per cent probability of no change in rates, with the first 25bps cut still anticipated for some time between the end of Q2 and the beginning of Q3 this year. 

Greco writes that this expectation fuels the anticipation for a less restrictive monetary policy from the FED, increasing risk exposure that market participants are willing to undertake. This contributes to the robust momentum of risk assets such as BTC, cryptocurrencies, and stocks, with the S&P 500 recently achieving a new all-time high.

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