May 13, 2024

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US Spot Bitcoin ETFs Rebound With Net Inflows After 4 Weeks of Outflows

Last week, US spot Bitcoin exchange-traded funds (ETFs) saw a turnaround in investor sentiment, with net inflows totaling $116.8 million after four consecutive weeks of outflows exceeding $1 billion. Despite Grayscale's Bitcoin Trust experiencing net outflows, other ETFs like Fidelity's FBTC and Ark Invest's ARKB attracted significant net inflows. This positive shift was part of a larger trend in global crypto investment products, which also saw net inflows totaling $130 million, including contributions from US spot Bitcoin ETFs. However, trading volume for these ETFs decreased, reflecting a broader decline in the global crypto exchange-traded product market. Although the recent inflows are encouraging, it's uncertain if they signal a sustained reversal for US spot Bitcoin ETFs. In contrast, ether-based investment products faced net outflows amid decreased optimism regarding spot ether ETF approvals in the US.

Japan's Metaplanet Added Bitcoin as Reserve Asset Amid Yen Slump

Metaplanet, a publicly listed investment firm, has recently announced its adoption of Bitcoin as a strategic reserve asset in response to Japan's ongoing economic challenges, including high government debt and a weakened yen. Japan's economic struggles, marked by a 34-year-low for the yen, have prompted Metaplanet Inc., based in Tokyo, to view Bitcoin as a reliable store of value due to its limited supply and non-sovereign nature. The firm aims to use various capital market instruments to grow its Bitcoin reserves, currently valued at $7.2 million.

Wells Fargo Discloses Investments in Bitcoin ETFs

Wells Fargo, a major American bank, has disclosed its investments in several Bitcoin ETFs, as revealed in a recent regulatory filing. The bank has purchased shares of Grayscale's GBTC spot Bitcoin ETF, invested in Bitcoin Depot Inc. (a Bitcoin ATM provider), and also has exposure to ProShares Bitcoin Strategy ETF (BITO), which involves BTC futures contracts. However, Wells Fargo's investments in these Bitcoin-related assets are relatively small, with around $141,817 in GBTC, less than $1,200 in BITO, and just $99 in Bitcoin Depot. Earlier reports suggested that Wells Fargo was offering Bitcoin ETF exposure to its wealth management clients via brokerage accounts. The bank has previously expressed interest in digital assets, even piloting its own digital currency in 2019. The surge in Bitcoin ETFs approved by the SEC in January has seen significant success, attracting billions of dollars in investments.

El Salvador Unveils $360M Bitcoin Treasury Monitoring Website

El Salvador has launched a proof-of-reserves website to monitor its Bitcoin holdings, providing real-time data on its 5,748 BTC valued at around $360 million. The country has purchased additional BTC recently, with seven BTC bought in the past week and a total of 31 BTC acquired over the last month. El Salvador made headlines as the first country to adopt Bitcoin as legal tender in September 2021, aiming to enhance financial inclusion, streamline remittance payments, and foster financial innovation. Despite initial criticism and Bitcoin's price fluctuations, El Salvador has been consistently investing in Bitcoin since 2021, currently holding an unrealized profit of over $57.4 million based on its average buying price of $43,097 per BTC.

Trading Desk Insights

Bitcoin has oscillated between $56,000 and $74,000 since March, and the anticipated surge following April's halving event failed to materialize due to a scarcity of market drivers. The market's behavior is marked by consistent lower lows and lower highs, indicating that investors are capitalizing on any price rallies to offload their holdings. After dipping to Friday’s lows, Bitcoin rebounded over 5%. Liquidations have been minimal, setting a solid foundation for future upward movements. The breakout of $65,000 might confirm the breakout of the inverted Head-and-Shoulders pattern on the 4H timeframe which could imply major bullish implications potentially sending prices to record highs.

Turning to U.S. Bitcoin ETFs, there has been a notable $84.7 million in outflows, primarily driven by Grayscale, which saw its largest withdrawals since May 1st, totaling $103 million. Exchange-traded fund (ETF) inflows have diminished recently, contributing to the prevailing bearish mood.

In Tokyo, Metaplanet, an investment firm, has embraced Bitcoin as a strategic reserve asset to mitigate risks associated with Japan's significant debt and yen volatility. Having recently invested $7.2 million in Bitcoin, Metaplanet has shifted its focus solely to Bitcoin and commercial real estate, stepping away from any Web3 ventures.

The mining difficulty for Bitcoin decreased by approximately 6% last week, the steepest drop since the cryptocurrency's low point in December 2022. This reduction is potentially beneficial for some miners, as the decreased Bitcoin value and doubled costs post-halving have forced the shutdown of pricier mining equipment, thus lowering the overall hashrate. However, miners with the lowest operational costs have gained a larger market share since the halving.

In the broader financial landscape, stock futures edged up on Monday, with investors gearing up for upcoming inflation data. This week's key focus will be the consumer price index (CPI) report set for release on Wednesday, crucial for assessing the Federal Reserve's future monetary policy. Despite recent higher-than-expected inflation figures, traders are optimistic that the Fed will hold off on increasing rates. The April CPI will be pivotal in determining if the stock market can maintain its stability after an unexpectedly robust first-quarter earnings period. As of this past Friday, 92% of S&P 500 companies have reported earnings, with nearly 80% surpassing expectations, bolstering market resilience amidst ongoing inflation concerns.

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