Published: October 9th, 2024
A blowout set of US employment data has damped down fears of an imminent economic slowdown in the US, raising Bitcoin’s price more than three per cent to reach USD 63,100 at time of writing.
America’s Bureau of Labor Statistics said on Friday 4th October said the country added 254,000 jobs in September, well in excess of the market consensus of 140,000 new jobs. July and August also saw their employment figures revised upward, suggesting previous perceptions of a weakening labor market were unfounded.
The September print indicated that US employers had added more positions in a month since this year’s previous high in March, when 310,000 new jobs were added. The rate of unemployment fell from 4.2 per cent to 4.1 per cent, just under consensus expectations.
While the price of BTC had cooled somewhat to just north of USD 62,000 by Friday’s close, the upward trend kept going through the weekend and into Tuesday, reversing the dip seen at the beginning of the month.
An analysis by Bloomberg said Friday’s jobs print was supportive of riskier assets like stocks and crypto. Lower borrowing costs from the Fed's easing campaign has also been advantageous for Bitcoin’s price.
This year’s semi-annual ‘Uptober’ event, a period where BTC typically sees price gains, was left on pause in the opening days of the month as Bitcoin briefly fell below the psychologically important USD 60,000 mark, prompting net outflows from BlackRock’s spot Bitcoin ETF for only the fourth time since its launch.
In late September, Investment funds pegged to cryptocurrencies saw inflows totaling hundreds of millions of USD as investors reacted to moves by the US Federal Reserve to finally cut interest rates.
Data from CoinShares showed that crypto traders and institutional investors poured some USD 320 million into funds that provide exposure to Bitcoin and other major coins. The data analytics firm said the inflows 'almost certainly triggered’ by comments from the US central bank’s Federal Open Market Committee last week.
On 18th September, Fed Chair Jerome Powell said the bank would slash interest rates by 50 basis points, sending traders galloping back to more risk-on assets. Cryptocurrencies and US stock prices both tend to exhibit greater volatility than other assets and typically perform better in low interest-rate environments.
CoinShares said that most of the fund inflows were drawn to Bitcoin, with investors putting USD 285 million into Bitcoin exchange-traded funds (ETFs). Since their long-awaited approved in January 2024, ETFs have proven to be a hit with traditional and individual investors, providing a risk-mitigated way to gain exposure to the world's number one cryptocurrency.
Bitcoin’s price rose to USD 64,270 on the news, having risen more than nine per cent in the previous seven days, CoinGecko said.
In the same period, investors appeared to have cooled on Ethereum, pulling money out of funds providing exposure to ETH. ‘Ethereum is still an outlier’, CoinShares wrote, ‘experiencing outflows for the fifth consecutive week, totaling USD 30 million.’
Following a downcast Q1 marked by net outflows, investors began wading back into Bitcoin exchange-traded funds in May 2024. Across the board, every one of the new-ish class of US investment products saw cash flow turn positive.
Figures published by Farside Investors showed that for the first time since receiving SEC approval, Bitcoin ETFs had achieved a unanimous turnaround. Investors flowing more cash into Grayscale’s Bitcoin Trust (GBTC) was the definitive move, marking the first-time that net inflows went positive since converting to an ETF in January.
From that point the fund experienced daily outflows as investors who had been unable to redeem shares previously exercised the option, apparently in a bid to locate competing funds with lower fees.
That all changed last Friday when GBTC ballooned by USD 62 million. That, and parallel moves by investors sending cash to all the other crypto funds, added up to USD 378 million flowing into the Bitcoin ETF market in a single day.
The turnaround is notable since the investment vehicles also posted their worst day ever the same week, losing more than half a billion dollars. The sudden departure came after weeks of cooling investor interest.
In January, the US Securities and Exchange Commission (SEC) finally gave assent to 11 spot Bitcoin ETF applications after a decade of regulatory heel-dragging. The funds allow everyday investors to gain exposure to crypto markets through a brokerage account. The instruments track the price of the cryptocurrency, so investors don't have to hold the crypto and face direct exposure to its ups and downs.
Earlier this year, January figures from CoinShares suggested a lot of money was exiting big Bitcoin funds, possibly explaining the price drop BTC and other cryptocurrencies experienced in the same time frame.
On the upside it appeared that outflows from the biggest fund, Grayscale, were starting to subside.
Investors had been in a hurry to cash out their Grayscale holdings since the fund changed over to an exchange-traded fund (ETF) in early January. This sent Bitcoin’s price plummeting when the fund moved its cryptocurrency holdings to Coinbase for custody.
The outflows from Grayscale alone came to USD 2.2 billion by mid-January, though CoinShares says outflows were starting to level off by end of January.
CoinShares added that investors also took over USD 500 million out of the hands of big crypto fund managers like Fidelity, ProShares, Bitwise, and 21Shares. Most of the outflows were in BTC.
Yet even with all the cash flowing out of these big funds, the newly minted Bitcoin ETFs did see significant inflows. ‘Newly approved BTC ETFs saw inflows in the region of USD 1.8 billion, a reverse image of the impact in BTC investment
funds. Since Bitcoin ETFs were approved by the SEC in early January, there have been inflows of USD 5.93 billion,’ CoinShares said.
