Bitwise CIO highlights BTC as key risk asset as ETF inflows rise amid 50bps rate cut possibility

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Spot Bitcoin exchange-traded funds (ETFs) posted inflows for the fourth straight day as the market considers the possibility of a 50 basis point (bps) rate cut today by the Fed. This suggests that Bitcoin is establishing itself as the go-to tool for risk-averse investors, conformable to Bitwise CIO Matt Hougan.

Fed funds futures today show a 61% chance of a 50 bps rate cut by the Federal Open Market Committee (FOMC) as reported by Reuters.

However, a significant rate cut of 50 bps would have been considered a bearish sign by investors a few weeks ago when the Bank of Japan made a sudden and sharp hike in the country’s interest rates, sending the market crashing at the beginning of August.

The possibility of a substantial discount under various circumstances makes risk assets more attractive to investors, hence Hougan’s remarks.

Over $500 million in revenue

Bitcoin ETFs saw inflows of nearly $502 million over the past four trading days, Farside Investors said DATA emphasize. In the last seven trading days, inflows for these funds amounted to $603 million.

Thus, Bitcoin ETFs returned 61% of the nearly $1 billion in outflows recorded between August 26 and September 6.

Surprisingly, inflows over the past four days were not dominated by BlackRock’s iShares Bitcoin Trust ETF (IBIT), which saw only $15.8 million in net positive inflows.

Fidelity’s Wise Origin Bitcoin Fund (FBTC) led the way between September 12 and 17, with inflows of $175.3 million, nearly 35% of all money going into Bitcoin ETFs during that period. The ARK 21Shares Bitcoin ETF (ARKB) followed closely behind with inflows of $159.8 million.

Notably, Grayscale Bitcoin Trust (GBTC) has seen just $20.6 million in outflows since September 12, which has helped net significant inflows.

Possible exits arrive

However, Bitfinex analysts ADVISED in the latest edition of “Bitfinex Alpha” reports that there could be a selling event in the days following the rate cut.

Moreover, there is a “fairly high” chance that an increase in volatility will occur in the coming days. As a result, crypto ETF flows and spot prices will suffer the impact of this move, which may trigger exits, according to Bitfinex analysts.

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