Bitcoin is on the brink of accomplishing its fifth consecutive monthly gain, marking its lengthiest winning streak since the surge triggered by the pandemic-induced rally supported by accommodating monetary policies.
Throughout January, Bitcoin (BTC) encountered significant price fluctuations, largely influenced by the launch of the first US-based spot Bitcoin exchange-traded funds (ETFs) and evolving perspectives on monetary policy.
Should the primary cryptocurrency continue on its current upward path, it will establish its lengthiest stretch of monthly gains since the period between October 2020 and March 2021. During that time frame, Bitcoin reached a historic peak of nearly $69,000.
Bitcoin Surged on Spot ETF Optimism
The launch of spot Bitcoin ETFs by well-known issuers like BlackRock and Fidelity Investments on January 11 had a significant impact on Bitcoin’s performance.
In the lead-up to these ETF launches, Bitcoin had seen a remarkable 160% surge in the previous year, with investors speculating that these ETFs would bring new participants into the market.
However, following the debut of these ETFs, Bitcoin experienced a 12-day decline of around 21%, as traders closely monitored the performance of these Bitcoin ETFs.
One of the noteworthy products, the Grayscale Bitcoin Trust with assets totaling $21 billion, underwent a transition from a closed-end structure to an ETF format. Initially, investors withdrew funds from the Grayscale fund following this conversion.
The pace of these withdrawals has since slowed down, allowing Bitcoin to regain some of the losses it had incurred during that period.
Decrease in GBTC Outflows Impact Bitcoin
The reduction in outflows from the Grayscale fund has had a positive impact on market sentiment, as highlighted by Sean Farrell, the head of digital asset strategy at Fundstrat Global Advisors LLC.
In a recent statement, Farrell underscored the importance of this development for the overall market.
Data compiled by Bloomberg indicates that the ten ETFs have collectively received a net inflow of $1 billion thus far.
These ETFs have experienced the most successful launch in history, both in terms of trading activity and investor flows, according to Bloomberg Intelligence.
In addition to the ETF developments, investors are closely monitoring this week’s Federal Reserve interest-rate decision. There is an even split in probabilities regarding the potential for a rate cut in March.
Any substantial changes in this outlook could have an impact on Bitcoin and the broader cryptocurrency market. This is because these markets are highly sensitive to shifts in sentiment and perceptions of liquidity.
In the broader context, if the leading cryptocurrency continues its upward trajectory, it will achieve its fifth consecutive monthly gain.
Notably, BlackRock’s spot Bitcoin ETF, named the iShares Bitcoin Trust (IBIT), surpassed $2 billion in assets under management (AUM) just two weeks after its launch on the Nasdaq. This achievement was driven by Bitcoin’s recent price performance, which boosted IBIT’s market capitalization to $2.11 billion.
Fidelity’s Wise Origin Bitcoin Fund (FBTC) is trailing slightly behind, attracting $1.8 billion in inflows over the past 10 days.
The annual fees imposed by ETF issuers play a role in attracting capital. BlackRock initiated its fee for the iShares ETF at 0.12% for the first 12 months or until it reaches the first $5 billion in assets under management, after which it plans to increase it to 0.25%. Meanwhile, other issuers, such as ARK Invest, charge 0.21%, VanEck lists a fee of 0.25%, and Bitwise charges 0.20%. These fee structures can influence investor preferences and fund flows.