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Bitcoin price today: gains limited amid rate uncertainty, slowing ETF activity

Published 04/04/2024, 02:07 AM
Updated 04/04/2024, 08:47 AM
© Reuters
- Bitcoin price climbed slightly on Thursday, offering some relief to investors as risk appetite remained largely frail amid uncertainty over U.S. interest rates, while signs of easing capital flows also weighed.

The world’s largest cryptocurrency rose 0.6% in the past 24 hours to $66,531.0 by 08:34 ET (12:34 GMT), though still well below record highs hit in March.

Bitcoin remained largely rangebound in recent sessions as mixed cues on U.S. interest rate cuts kept traders largely wary of making big bets. Anticipation of key U.S. nonfarm payrolls data due later in the week also deterred big trades.

The token took little support from the weakness in the dollar, which tumbled from recent five-month highs after Federal Reserve Chair Jerome Powell offered middling cues on interest rates. While Powell said the bank still supported cutting interest rates eventually in 2024, he gave scant cues on the timing and scale of the cuts.

Powell also said the Fed needed more confidence that inflation was moving back towards its 2% annual target.

Beyond Powell, other members of the Fed’s rate-setting committee are also set to speak later this week.

Crypto prices today: XRP, ETH muted as fund flows favor Bitcoin

Other major cryptocurrencies clocked middling moves, as recent data showed a bulk of capital flows remained heavily biased towards Bitcoin. XRP fell to a one-month low in anticipation of more developments in the Ripple vs SEC case.

World no.2 crypto Ethereum rose 1.2% to $3,347.82, ahead of an SEC decision on spot exchange-traded funds for the token, which is due in May.

Fund flow data from digital asset manager CoinShares (ST:CS) showed this week that while capital inflows into digital assets resumed after a record-high outflow, a bulk of inflows remained largely biased towards Bitcoin.

But CoinShares analysts also noted that while capital inflows picked up, ETF activity was slowing down. Daily trading turnover fell to $5.4 billion in the week to March 30, down 36% from a peak seen three weeks ago. The drop indicated that hype over the approval of Bitcoin ETFs was now cooling after initially sparking a sharp rally over the past two months.

The approval of spot Bitcoin ETFs was a key driver of the token’s rally so far in 2024, helping it notch record highs of over $73,000 in March.

Hedge funds bearish bets on Bitcoin hit record highs

At the close of the first quarter, leveraged funds, defined as hedge funds and commodity trading advisers by the Commodities Futures Trading Commission (CFTC), set a new record for bearish bets on bitcoin as its price rally neared peak levels.

According to the latest CFTC data, these funds increased their net short positions in the Chicago Mercantile Exchange's (CME) bitcoin futures to 16,102, the highest since these futures were introduced in 2017.

Each CME bitcoin futures contract represents 5 BTC.

This strategy involves selling futures contracts to anticipate or hedge against a potential decline in bitcoin's price, often used by carry traders or arbitrageurs to capture price differences between futures and the spot market.

"There is a massive demand from hedge funds to put on carry trades. Despite bitcoin’s -10% decline from the all-time high, the futures premium has remained in double digits, and hedge funds are taking advantage of these high rates," Thielen told CoinDesk.

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