Bitcoin (
This situation has left traders questioning the reasons behind the continued outflows and why Bitcoin's rally to $82,000 on April 9 failed to boost confidence among ETF investors.
Spot Bitcoin ETF net flows. Source: Farside Investors
One factor contributing to diminished interest is the rising likelihood of an economic recession. "What you can clearly observe is that liquidity on the credit side has dried up," Lazard Asset Management global fixed income co-head Michael Weidner
A credit crunch is a sharp decline in loan availability, leading to reduced business investment and consumer spending. It can happen regardless of US Treasury yields because heightened borrower risk perceptions may independently restrict credit supply.
RW Baird strategist Ross Mayfield noted that even if the US Federal Reserve decides to cut interest rates in an effort to stabilize turbulent markets, any relief for companies might be short-lived.
Mayfield reportedly stated: "In a stagflationary environment from tariffs, you'll see both investment grade and high yield corporate borrowers struggle as their costs of debt rise." Despite the 10-year US Treasury yield remaining flat compared to the previous month, investor appetite for corporate debt remains weak.
ICE Bank of America Corporate Index option-adjusted spread. Source: TradingView / Cointelegraph
Dan Krieter, director of fixed income strategy at BMO Capital Markets,
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Investors remain concerned that even if the US Federal Reserve cuts interest rates, it may not be enough to restore confidence in the economy. This sentiment also explains why the US Consumer Price Index (CPI) for March—at 2.8%, its slowest annual increase in four years—failed to positively impact stock markets. "This is the last clean print we're going to see before we get those tariff-induced inflation increases,” Joe Brusuelas, RSM chief economist,
Traders appear to be waiting for stabilization in the corporate bond market before regaining confidence in Bitcoin ETF inflows. As long as recession risks remain elevated, investors will likely favor safer assets such as government bonds and cash holdings. Breaking this correlation would require a shift in perception toward Bitcoin’s
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.