ETF Outflows, May Rate Cut Doubts Drop BTC Below $65K, Though Anticipated June Cuts May Provide Boost, As Altcoin and Memecoin Upward Streak Slows, and SBF Is Sentenced to 25 Years

Takeaways

• ETF outflows and government movement of crypto assets push price of BTC down: As we have seen in recent weeks, the price of BTC declined alongside increasing ETF outflows, as Cathie Wood’s ARK 21Shares Bitcoin (BTC) ETF experienced its first outflows, dropping from above $70K to a low of $64.5K on Tuesday. Further headwinds included the movement of 30,175 BTC by the U.S. government, sparking concerns over whether the assets would be sold or held in custody.
• Equity and crypto markets impacted negatively by May rate cut doubts: U.S. equities and crypto markets dropped this week as the market ruled out a rate cut coming in May, with the expectation that the June meeting will deliver the first rate cut of the year rising to 62.3%. US manufacturing expanded in March, and the personal consumer expenditures price index accelerated in February from the previous month, suggesting the economy is continuing to grow while progress on inflation has stalled.
• Altcoins and memecoins decline in response to BTC drop: Altcoins saw a heavy pullback in the wake of BTC shifting downward. AI-related tokens in particular saw some of the largest declines, while memecoins also experienced a slight correction following their strong run up in the past couple of weeks.
• SBF sentenced to 25 years on seven counts of fraud and conspiracy: Sam Bankman-Fried (SBF), the founder and former CEO of the collapsed crypto exchange FTX, was sentenced to 25 years in prison last week for seven different fraud and conspiracy charges. The FTX exchange was once valued at $32B at the height of the previous bull market before collapsing as it was discovered that over $8B of customer funds had been stolen.

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BTC Drops in Wake of BTC ETF Outflows, Seized Asset Movement

Cathie Wood’s ARK 21Shares Bitcoin (BTC) ETF experienced its first outflows on Monday, albeit small at $0.3M. However, this was followed up on Tuesday with further outflows of $87.5M, which outpaced the outflows from GBTC for the first time since the launch of the spot BTC ETFs.

As we have seen in recent weeks, the price of BTC declined alongside the increasing ETF outflows, dropping from above $70K to a low of $64.5K on Tuesday. Further headwinds that contributed to the price decline this week include the movement of 1,999 BTC by the US Government to a Coinbase-linked wallet, related to the seized assets from Silk Road. This weighed on the price of BTC, with market participants speculating about the government's plans for the tokens. Currently it is unclear whether the tokens have already been sold, will be sold in the near future, or are just being held for custody.

Markets React to Rate Cut News

U.S. equities dropped lower to start the week as investors revised their expectation of interest rate cuts this year. The S&P 500 posted a 0.72% decline on Tuesday, while the Nasdaq saw a bigger decline of 0.94% as market participants became more cautious about the size and speed of rate cuts.

The market has now pretty much ruled out a rate cut coming in May, with the expectation that the June meeting will deliver the first rate cut of the year rising to 62.3%. The sentiment surrounding BTC has also shifted lower with the revision of U.S. rate expectations. However, some analysts expect that a rate cut in June could positively impact crypto prices.

US manufacturing expanded in March, and the personal consumer expenditures price index accelerated in February from the previous month, suggesting the economy is continuing to grow while progress on inflation has stalled.

After starting the year with the expectation of six rate cuts, the market is now expecting the Federal Reserve to cut rates by three-quarters of a percentage point by the end of 2024, moving in line with what the Fed signaled back in December.

Altcoins and Memecoins Draw Downward in Wake of BTC Drop

Altcoins saw a heavy pullback in the wake of BTC shifting downward, with many tokens experiencing double-digit declines. AI-related tokens which have been part of one of the most prominent narratives in recent months saw some of the largest declines, including Render (RNDR) -13.3%, Fetch.ai (FET) -13.9% and Worldcoin (WLD) -18.7%, over the past 7 days.

Memecoins have also seen a slight correction after their strong runup over the past couple of weeks. One exception is dogwifhat (WIF), which has managed to post a +20% gain over the past 7 days and crossed the $4bn market capitalization mark.

SBF Sentenced to 25 Years in Prison

Sam Bankman-Fried (SBF), the founder and former CEO of the collapsed crypto exchange FTX, was sentenced to 25 years in prison last week for seven different fraud and conspiracy charges. The FTX exchange was once valued at $32B at the height of the previous bull market before collapsing as it was discovered that over $8B of customer funds had been stolen, with SBF using the funds to make investments, purchase real estate, and make political donations.

-From the Gemini Trading Desk