Bitcoin exchange-traded funds (ETFs) have seen almost $645 million in redemptions in just two days as investors have started to worry about US Federal Reserve Chair Jerome Powell’s Jackson Hole speech.
Outgoing Fed Chair Powell is expected to address pressing concerns during the annual economic forum, including addressing the worrying rise in inflation, jobless growth and most importantly, a timeline for revising interest rates by the Federal Open Market Committee.
In the past two days, Fidelity’s FBTC saw $246.9 million worth of redemptions, while Grayscale’s GBTC saw $115.5 million and Bitwise’s BITB lost $86.8 million.
Despite this, Bitcoin’s market value has reduced by just 1.5%, with most analysts saying this redemption trend is a cautious approach, not a panicked short-term profit-taking exercise.
In the past month, investors have been choosing Ethereum ETFs over Bitcoin, mostly on the back of its higher functionality and ease of mining.
Bitcoin has been in the news recently for its sky-high valuation of $2.41 trillion (and rising), just behind Nvidia, Microsoft and Apple. Despite giving fantastic returns, investors remain worried about the economic outlook and the potential impact it could have on their investments.
The Fed Reserve’s next move is keenly awaited, especially as Fed Reserve Chairman Powell is under extreme political pressure to cut interest rates to stimulate growth. Wall Street economists are expecting a 0.25 per cent rate cut, the first since December 2024.
“Data alone suggests a rising risk of a stagflationary scenario; supply-chain disruptions could cause inflation to remain stubbornly elevated” Will Denyer, chief U.S. economist at Gavekal Research, explained. “The labor market will be the swing factor on whether the Fed cuts interest rates in September or not,” he added.
