Treasury Buyback Decision Sparks Mixed Flows in Crypto Markets

Crypto markets saw mixed flows last week amid the U.S. Treasury's announcement to double long-end bond buybacks to $4 billion per operation, according to Roxanna Islam, sector head at VettaFi.

The decision led to a surge in Bitcoin prices, reaching $80,000, and triggered a short squeeze in crypto markets. Spot Bitcoin ETFs experienced net inflows of $2 billion last week, while spot Ether ETFs added nearly $900 million.

However, year-to-date flows for spot Bitcoin ETFs remain negative, down $2.5 billion. Islam noted that ETF flows have formed a 'barbell pattern', anchored by the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund at one end, with lower-cost entrants like the Morgan Stanley Bitcoin ETF attracting investors at the other.

Islam also highlighted the closure of some crypto ETFs, including REX Osprey's staked Ether and Bitcoin funds, alongside Grayscale's withdrawal of filings for Cardano, Polkadot, and Hedera ETFs. She attributed this to concentration in demand rather than waning interest.