Bitcoin ETF To Face A New Downtrend, Here’s Why

Amid a broader crypto market selloff, concerns over the trajectory of the Bitcoin Exchange-Traded Fund (ETF) have intensified following a recent report signaling a new downtrend for the investment instrument. Notably, the recent announcement from the Deposit Trust Company (DTCC) regarding collateral values for ETFs containing BTC or other cryptocurrencies has fueled concerns among investors.

DTCC Announcement Rattles Bitcoin ETF Investors

The U.S. Spot Bitcoin ETFs have witnessed a topsy-turvy scenario lately, as evidenced by the significant outflows this week. Meanwhile, this has raised concerns among investors over a cooling interest from the Wall Street players toward the flagship crypto. In addition, this move seems to have also contributed to the recent crypto market selloff.

Meanwhile, amid this, a recent report from 10X Research has cast a shadow over the BTC ETF landscape, citing the DTCC’s decision to apply a 100% haircut to ETFs with cryptocurrency exposure starting April 30. This move has raised speculation about a potential reversal in Bitcoin ETF inflows, particularly as the cryptocurrency market grapples with heightened volatility and a significant outflow from U.S. Spot BTC ETFs.

Notably, the DTCC’s decision to withhold collateral value from ETFs featuring cryptocurrencies as underlying assets has sent shockwaves through the digital asset market. With Bitcoin making lower highs, 10X Research predicted a new downtrend seemingly in place for the Bitcoin ETF. Considering that, the market participants’s concerns seem to be mounting over the potential implications of the DTCC’s stance on Bitcoin ETFs.

Also Read: Bitcoin Wallets Rising Quickly As Active Wallets for These Crypto Drop

DTCC’s Announcement Comes Amid Notable Outflux

The recent declaration from DTCC has sent shockwaves through the financial community, particularly impacting BTC ETFs. Effective immediately, DTCC has halted the allocation of collateral to ETFs linked to Bitcoin or cryptocurrencies, posing significant challenges for investors. 

Meanwhile, this decision comes ahead of the implementation of amendments to collateral values starting April 30, 2024, affecting select securities in the Collateral Monitor. Notably, DTCC’s move implies a 100% haircut for ETFs with crypto exposure, raising concerns about their viability and potential market repercussions. 

Besides, the decision comes amid a massive outflow noted in the U.S. Spot Bitcoin ETFs this week. For context, the total U.S. Spot BTC ETF has witnessed an outflow of $328 million this week. Notably, over the last three days through April 26, the Bitcoin ETF outflow totaled $421.8 million.

Also Read: Ex-Grayscale Director Warns Bitcoin Price Crash To $52000