The cryptocurrency market remained subdued on Tuesday following the Bitcoin halving event, with prices showing little change amidst ongoing capital outflows from investment products. Despite heightened on-chain activity stemming from the launch of a new protocol on the Bitcoin blockchain, market sentiment remained tepid, overshadowing the significance of the halving event.
Bitcoin, the leading cryptocurrency, experienced marginal movement, with a 0.05% decline over the past 24 hours, settling at $65,967.1 by 08:54 ET (12:54 GMT).
Data from CoinShares revealed that Bitcoin investment products, particularly exchange-traded funds (ETFs), witnessed outflows totaling approximately $192 million in the week ending April 21. This downward trend in capital inflows persisted, with U.S. ETFs registering $244 million in outflows during the same period. The waning enthusiasm surrounding the launch of spot Bitcoin ETFs earlier in the year contributed to the decline in trading volumes and investor interest.
While the introduction of spot ETFs propelled Bitcoin prices to historic highs in March, the cryptocurrency has since remained rangebound, fluctuating between $60,000 and $70,000. This stagnation can be attributed to diminishing optimism surrounding the ETFs and increasing uncertainty over the Federal Reserve’s monetary policy, particularly in light of potential interest rate hikes.
Although lower interest rates have historically driven long-term gains in the crypto sector, recent indications of a hawkish Fed stance and persistent inflation concerns have created a less favorable environment for cryptocurrencies.
While Bitcoin’s performance remained subdued, altcoins experienced mixed price movements on Tuesday. Ethereum, the second-largest cryptocurrency, dipped by 0.5% to $3,184.91, while Solana and XRP posted modest gains of 0.45% and 2%, respectively. However, the broader market sentiment remained subdued, with traders predominantly favoring Bitcoin over alternative tokens.
Despite the lackluster performance of crypto tokens, crypto-related stocks witnessed some upward momentum on Monday, fueled by heightened transaction fees following the halving event. Notable companies such as Marathon Digital Holdings Inc, Coinbase Global Inc, Riot Platforms, and MicroStrategy Incorporated recorded gains ranging from 6% to 13%.
Analysts at Bitfinex underscored the potential impact of the halving event on Bitcoin’s market dynamics, estimating that the reduction in mining rewards could lead to a significant supply-demand imbalance. With the daily issuance rate of new coins declining post-halving, the net inflow from spot Bitcoin ETFs exceeded new supply, signaling sustained investor interest despite recent market fluctuations.
