Bitcoin ETFs add $250 million as investors anticipate rate cut

Bitcoin (CRYPTO:BTC) exchange-traded funds (ETFs) experienced a significant surge in demand on Monday, adding around $250 million worth of Bitcoin.

This represents the highest single-day addition in over a month, according to data from blockchain analytics firm Arkham Intelligence.

The increase in buying activity pushed Bitcoin’s price above $61,000 on Tuesday, reaching its highest level in September.

The recent uptick in demand comes as investors anticipate a potential interest rate cut by the U.S. Federal Reserve.

The central bank, led by Chair Jerome Powell, is expected to announce a rate reduction on Wednesday following a series of rate hikes in 2022 aimed at curbing post-pandemic inflation.

A rate cut could have broad implications for financial markets, including Bitcoin.

Bitcoin ETFs provide investors with exposure to Bitcoin through shares traded on traditional stock exchanges.

When investor demand for these ETFs rises, the funds purchase additional Bitcoin to back the shares.

Top asset managers like BlackRock, Fidelity, and Grayscale launched Bitcoin ETFs in January after gaining approval from the U.S. Securities and Exchange Commission (SEC).

These products initially attracted billions in investments but saw a slowdown as uncertainty over Federal Reserve policy continued.

Recent comments from Federal Reserve officials have suggested a more dovish approach, leading some market participants to expect a larger rate cut of 50 basis points instead of 25 basis points.

James Butterfill, Head of Research at CoinShares, said, “This is in direct response to the increasing likelihood of a 50-basis point rate cut rather than a 25-basis point cut.”

Renewed investor optimism has boosted interest in Bitcoin ETFs.

Data from digital asset manager CoinShares showed that $436 million flowed into crypto investment funds last week, with the majority directed toward Bitcoin ETFs.

This rebound follows a period of significant outflows, where $1.2 billion was withdrawn from Bitcoin funds, suggesting a shift in market sentiment ahead of the Federal Reserve's decision.

At the time of reporting, the Bitcoin (BTC) price was $60,162.31.