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Bitcoin price today: little changed at $66k as rate jitters spur capital outflows

Published 04/23/2024, 01:40 AM
Updated 04/23/2024, 08:59 AM
© Reuters

Bitcoin price remained little changed on Tuesday as the halving event passed with insignificant price action, while capital outflows from investment products continued amid uncertainty over higher-for-longer interest rates.

While the launch of a new protocol on the Bitcoin blockchain spurred increased on-chain activity, the move offered little support to the token’s price. The launch also largely overshadowed the halving event.

Bitcoin fell 0.05% in the past 24 hours to $65,967.1 by 08:54 ET (12:54 GMT).

Bitcoin price muted as ETFs see sustained outflows

Data from digital assets manager CoinShares showed on Monday that Bitcoin investment products, specifically exchange-traded funds, saw outflows of about $192 million in the week to April 21.

Overall trading volumes also dropped amid waning hype over the launch of spot Bitcoin ETFs earlier this year. U.S. ETFs in particular saw $244 million outflows in the past week, CoinShares said in a report.

While the launch of spot ETFs drove Bitcoin prices to record highs in March, the token has remained largely rangebound- between $60,000 and $70,000- over the past month, amid waning enthusiasm over the ETFs.

Crypto ETFs saw sustained outflows in recent weeks as markets grew more doubtful over early interest rate cuts by the Federal Reserve. Lower interest rates have remained the key driver of long-term crypto gains, given that the sector benefits from increased speculation in a high-liquidity environment.

But the prospect of higher-for-longer interest rates- following hawkish Fed signals and sticky inflation data- present a less conducive environment for crypto.

Crypto price today: Altcoins marginally higher

Other crypto tokens saw mixed price action on Tuesday, though they remained largely rangebound amid few positive cues for the sector.

World no.2 token Ethereum fell 0.5% to $3,184.91, while Solana and XRP rose 0.45% and 2%, respectively.

But further gains in altcoins were limited as crypto traders remained largely biased towards Bitcoin.

Bitcoin demand after halving to be 5x higher than supply, report says

Despite rangebound crypto token prices, crypto stocks saw some gains on Monday, as the impact of the halving event- which cuts mining rewards in half- was largely overshadowed by a spike in Bitcoin transaction fees, to record highs.

This spike was spurred by the launch of the “Runes” protocol on Bitcoin, which allows users to mint tokens on the world’s biggest blockchain.

Marathon Digital (NASDAQ:MARA) Holdings Inc (NASDAQ:MARA), Coinbase Global Inc (NASDAQ:COIN), Riot Platforms (NASDAQ:RIOT) and MicroStrategy Incorporated (NASDAQ:MSTR) surged between 6% and 13% on Monday.

Meanwhile, according to analysts at the cryptocurrency exchange Bitfinex, the latest halving of Bitcoin's mining rewards could significantly impact the market, potentially causing demand for the cryptocurrency to exceed supply by five times.

On Saturday, the reward for each block mined was reduced from 6.25 BTC to 3.125 BTC.

Bitfinex estimates that this reduction in mining rewards will lower the notional value of new coins entering the supply each day to $30 million, which is five times less than the average daily demand for U.S. spot ETFs.

"With the daily issuance rate declining post-halving, we estimate that the new supply added to the market (new BTC mined) would amount to approximately $40-$50 million in USD-notional terms based on issuance trends,” Bitfinex said in a report seen by Coindesk.

“It is expected that this could possibly drop over time to $30 million per day, including active and dormant supply as well as miner selling, especially as smaller miner operations are forced to shut down shop," they added.

"The average daily net inflows from spot Bitcoin ETFs dwarf that number at over $150 million, even though flows have moderated and even turned net negative over recent weeks," analysts noted.

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