Bitcoin ETF Inflows Remain Tepid After Fed's Interest Rate Decision

Inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) remained sluggish for the second consecutive day following the Federal Reserve’s decision to keep interest rates unchanged. The Federal Open Market Committee’s (FOMC) announcement has dampened investor sentiment, which in turn is impacting the flow of capital into Bitcoin ETFs.

Data from SoSoValue reveals that on January 29, the 12 spot Bitcoin ETFs collectively recorded inflows of $92.09 million. This marks a continuation of the weak inflow trend observed in the prior day. Notably, Grayscale’s mini Bitcoin Trust saw the largest inflows, drawing in $106.23 million, while Fidelity’s FBTC followed with $18.2 million.

However, some of the major players in the Bitcoin ETF space experienced net outflows. BlackRock’s IBIT ETF, which had been on a nine-day streak of inflows, saw $92.09 million in outflows, reversing its positive momentum. Similarly, Bitwise’s BITB recorded a net outflow of $3.96 million on January 29. The remaining eight Bitcoin ETFs saw no movement in their flows.

Total trading volume across all Bitcoin investment products on the day amounted to $3 billion, with their combined net assets reaching $121.36 billion. This represents 5.88% of the total Bitcoin supply.

The muted inflows come on the heels of the Federal Reserve's decision to maintain its federal funds rate at a range of 4.25% to 4.50%. The Fed’s stance, which was driven by “somewhat elevated inflation,” aligns with market expectations and has contributed to cautious sentiment across risk assets.

Despite Bitcoin’s price rising 3.1% over the past 24 hours, reaching $105,366, investors remain hesitant. Matt Mena, a crypto research strategist at 21Shares, noted that while the Fed’s decision did not trigger significant market movement, the broader sentiment indicates that investors are awaiting clear signals regarding potential rate cuts.

“While yesterday’s Fed decision didn’t shake the market, the bigger picture remains clear—investors are waiting for confirmation that rate cuts are on the horizon,” Mena explained.

As market participants look ahead, attention is shifting to the upcoming Personal Consumption Expenditures (PCE) report, scheduled for release this Friday. The PCE report is expected to provide further insights into inflation trends and could serve as a key catalyst for risk assets, including Bitcoin.

Should the data indicate favorable conditions for risk assets, Bitcoin could test higher resistance levels, with $108,000 seen as a major upside target. Until then, Bitcoin is expected to consolidate within its current range, with the $105,000 level acting as a critical breakout point.

As the market awaits the PCE report, the outlook for Bitcoin ETFs and broader market sentiment remains largely tethered to the Fed's next steps and the evolving economic landscape.