Bitcoin ETF weekly inflows drop 68% amid the Fed’s interest rate decision and concerns over Deepseek

Bitcoin ETF inflows took a significant hit last week, dropping 68% amidst the Federal Reserve’s interest rate decision and market fears sparked by China’s Deepseek AI platform. Inflows into the 12 spot Bitcoin ETFs in the U.S. totaled just $559.84 million, compared to $1.76 billion the previous week, according to data from SoSoValue.

The week began with $457.48 million in outflows as concerns over Deepseek, a Chinese AI app competing with ChatGPT, triggered a market downturn. Investors’ fears were compounded by the global market’s instability, with a near $1 billion in liquidations across the crypto market on the day of the Deepseek launch.

Despite this, the Bitcoin ETF market saw some positive movement in the days leading up to the Federal Open Market Committee (FOMC) meeting. Inflows returned on January 29 after the Fed’s dovish stance on interest rates, which remained unchanged at 4.25% to 4.50%. Following the Fed’s announcement, Bitcoin ETFs experienced a 500% surge in inflows, attracting $588.22 million, with BlackRock’s IBIT leading the pack with $321.5 million.

The following day, January 31, saw continued inflows of $318.56 million, with BlackRock’s IBIT again topping the inflows at $363.83 million. However, some funds like Bitwise’s BITB and Grayscale’s GBTC saw withdrawals, totaling $56.03 million and $30.59 million, respectively.

Looking ahead, Matt Hougan, the global head of research for Bitwise Asset Management, predicts that Bitcoin ETFs will surpass $50 billion in inflows by the end of 2025, despite expected volatility in the market. For 2024, the 12 spot Bitcoin funds are forecasted to attract $35.2 billion in inflows. Furthermore, the Bitcoin ETF market is set to grow, with BTC ETFs from major issuers like Wells Fargo, Stifel, Raymond James, and UBS expected to receive approval by the first quarter of 2025.

In summary, while Bitcoin ETF inflows have dipped due to market volatility, the long-term outlook remains optimistic, with significant growth expected for Bitcoin ETFs in the coming years.