Spot Bitcoin exchange-traded funds (ETFs) experienced substantial outflows totaling $772 million as investors worry about inflation caused by new U.S. tariffs. From March 28 to April 8, ETFs saw $595 million in outflows, with an additional $127 million following the temporary lifting of tariffs on April 9. Despite Bitcoin's price rising to $82,000 on April 9, this did not restore confidence among ETF investors. A key factor contributing to the outflows is rising credit risk, as liquidity in the corporate bond market declines, leading investors to favor safer assets like government bonds. Experts suggest that even if the Federal Reserve cuts interest rates, it may not be enough to stabilize the economy, which is facing stagflation due to tariff-induced inflation. The U.S. Consumer Price Index shows a slow annual increase, but concerns persist about future inflation spikes. Moreover, increased borrowing costs in a recessionary environment could further hinder corporate investment and consumer spending. Until stabilization occurs in the corporate bond market, investors are likely to remain risk-averse with a preference for cash or government bonds.

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