Bitcoin falls below $67K as ETFs experience withdrawals prior to fed meeting and inflation figures

On Tuesday, the bitcoin (BTC) price dropped below $67,000, driven by the spot bitcoin exchange-traded fund (ETF) market experiencing net outflows for the first time in almost three weeks on Monday. Bitcoin investors are cautious ahead of upcoming inflation data and a significant interest rate decision by the Federal Reserve.

Similar to investors in stocks and other risky assets, bitcoin investors are closely monitoring the release of the Consumer Price Index (CPI) inflation data on Wednesday morning and the Federal Reserve's policy meeting in the afternoon.

The inflation figures and comments from Fed Chair Jerome Powell will influence market expectations regarding the timing and magnitude of potential interest rate cuts. The sustained high interest rates have led to increased bond yields, diminishing the appeal of riskier assets like bitcoin among investors.

Bitcoin ETFs falter, inflow streak broken

On Friday, bitcoin appeared poised to reach a new all-time high nearing $72,000, but since then, its trajectory has been downhill. On Tuesday, the bitcoin price dropped below $67,000 for the first time this month, marking a decline of approximately 7% from its Friday peak.

Spot bitcoin ETFs, including BlackRock's iShares Bitcoin Trust (IBIT), GrayScale's Bitcoin Trust (GBTC), and Fidelity's Wise Origin Bitcoin Fund (FBTC), which closely mirror the cryptocurrency's price, also traded lower on Tuesday.

The recent decline in bitcoin's price coincided with the first day of net outflows in the U.S. spot bitcoin ETF market in 20 days. According to data from Farside Investors, outflows totaled $64.9 million on the previous day.

Just last week, bitcoin ETFs saw strong inflows, including the second-largest inflow day since their launch in January, totaling $886.6 million. However, analysts in the crypto market noted that much of these inflows were due to arbitrage opportunities between spot ETFs and futures markets, which helped explain why the price did not surge despite the robust inflows.

Bitcoin-related stocks also experience the impact

As bitcoin prices declined, it caused significant losses for several prominent crypto-related stocks.

Shares of Microstrategy (MSTR), which held 214,278 bitcoins valued at $5.074 billion as of the first quarter, dropped approximately 6% in Tuesday's trading session. Despite this week's decline, the stock has more than doubled since the beginning of the year.

Bitcoin mining companies, both large and small, also saw losses during intra-day trading. Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) each experienced declines of around 6%. Among smaller miners, Hut 8 (HUT) shares fell by 8%, CleanSpark (CLSK) by 7%, and Bitdeer (BTDR) by about 5%.

Shares of cryptocurrency trading platforms like Coinbase Global (COIN) were down 5%, while Robinhood (HOOD) stock slid more than 3%.