BlackRock’s spot Bitcoin exchange-traded funds (ETF) iShares Bitcoin Trust trading under the ticker “IBIT” has seen inflows 69 days straight, said Bloomberg Intelligence ETF analyst Eric Balchunas in a social media post.
The fourth Bitcoin halving took place late on Friday at block height 840,000. This marked a pivotal change in the cryptocurrency’s supply dynamics. The halving event occurs approximately every four years and has reduced the mining reward from 6.25 to 3.125 bitcoins.
Waking up on 4/20 to see $IBIT took in cash for the 69th straight day, which was also the halving. It’s a little too perfect https://t.co/7Z8W3t9L7h
— Eric Balchunas (@EricBalchunas) April 20, 2024
The Bitcoin halving has in turn triggered a supply squeeze. Reductions are part of a predefined strategy to limit the total supply of Bitcoin to 21 million, enhancing its scarcity by halving the influx of new coins into circulation.
The latest data from Farside Investments shows that Bitcoin ETF flows are once again gaining momentum after experiencing a slowdown in inflows despite the highly anticipated bullish Bitcoin halving event.
Geopolitical Risk in the Middle East Impacting Market
The growing Israel-Iran conflict has played a role in impacting the Bitcoin price. Last week Bitcoin saw a sell-off and experienced volatility triggered by the military situation in the Middle East. Usually, Bitcoin is seen as a hedge against global uncertainty. On Monday, Bitcoin price remains stable trading at around $66,300.
“One financial effect of the conflict in Israel was the strengthening of the Dollar, for instance, measured by the U.S. Dollar Index. This is a move towards safety. Portfolio managers reduce the exposure to high-volatility assets in such a situation. Bitcoin has one of the highest historical volatilities in a portfolio that contains stocks and bonds too. So portfolio managers sell Bitcoin to effectively reduce their portfolio volatility,” Basile Maire, a co-founder of D8X, a decentralized exchange told Cryptonews.
Macro-Driven BTC Price Largely Driven by Bitcoin ETF Trading
Maire went on to explain that we have seen similar Bitcoin price actions earlier this year that coincided with a Dollar strengthening or flight-to-safety. These political events often have a short-lived impact on financial markets.
“It looks like macro-driven price impacts on Bitcoin are largely sparked by Bitcoin ETF trading as opposed to crypto-native trading. The introduction of ETFs also seems to strengthen the impact of macro-events on Bitcoin prices,” said Maire.
“From the standpoint of portfolio management, it’s understandable that Bitcoin and other cryptocurrencies may experience sharper declines compared to stocks and other traditional assets in this situation,” explains Maire.
This doesn’t contradict Bitcoin’s potential as a hedge against global uncertainty in the long run.
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