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Bitcoin (BTC) may have soared to a record-breaking $82,000 on April 9, but spot Bitcoin exchange-traded funds (ETFs) are telling a different story. Between March 28 and April 8, these ETFs recorded net outflows totaling $595 million, according to Farside Investors. Even after the U.S. temporarily lifted most import tariffs, funds saw an additional $127 million pulled out, bringing the total to $722 million.
This trend has left traders puzzled. Why are ETF investors turning their backs on Bitcoin despite its rally?
The answer may lie in growing fears of a looming economic recession. Michael Weidner, co-head of global fixed income at Lazard Asset Management, told Reuters that corporate credit liquidity has dried up, signaling a potential credit crunch. Investors are retreating to the safety of government bonds and cash, wary of higher default risks in the corporate sector.
A credit crunch could restrict loan availability, curbing business investment and consumer spending. RW Baird strategist Ross Mayfield warned that even if the Federal Reserve cuts interest rates to stabilize the economy, the relief may be short-lived in a stagflationary environment triggered by tariffs.
Data from TradingView and Cointelegraph shows that corporate bond spreads—an indicator of perceived risk—have widened significantly, marking their largest one-week jump since the March 2023 banking crisis. Dan Krieter, director at BMO Capital Markets, confirmed that this shift reflects a weakening appetite for corporate debt.
Also Read: VanEck Confirms China and Russia Use Bitcoin for Energy Transactions: A Shift in Global Trade
Meanwhile, inflation seems muted. March’s U.S. Consumer Price Index (CPI) rose just 2.8% year-over-year, its slowest pace in four years. But economists like Joe Brusuelas of RSM caution that tariff-driven inflation is likely on the horizon, casting further uncertainty on financial markets.
Until confidence returns to the corporate bond market, Bitcoin ETF inflows may remain subdued. For now, investors are prioritizing stability over speculation—leaving Bitcoin’s censorship-resistant, fixed-supply narrative on the sidelines.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
