HTX Research: $1.36 billion left bitcoin, ether ETFs ahead of midterms

HTX Research, the research arm of the HTX exchange, published a pre-election outlook on Oct. 23, saying near-term pricing of digital assets is governed by inflation, financing costs and capital flows.

ETF outflows reached $1.36 billion in ten trading days

According to HTX Research, spot bitcoin ETFs recorded about $537.4 million of net outflows and spot ether ETFs about $825.1 million from Oct. 1 to Oct. 14, citing Farside Investors. That totals roughly $1.36 billion.

We summed Farside's daily figures for bitcoin and ether and got the same results: -$537.4 million and -$825.1 million, or -$1,362.5 million combined (our calculation).

The pattern differs by asset. Bitcoin funds lost $484.9 million on Oct. 7 and $244.1 million on Oct. 8, which outweighed several inflow days. Ether funds had net outflows on nine of the ten days (our count).

On Oct. 14, the last day in the report's window, bitcoin funds lost $261.4 million and ether funds $129.5 million.

A rate rise and 3.7% inflation frame the cautious base case

The Federal Reserve said on Sept. 16 that the Federal Open Market Committee voted 12-0 to raise the federal funds target range by a quarter point to 3.75% to 4.00%.

The Bureau of Labor Statistics said its consumer price index rose 0.6% in September after 0.4% in August. Prices were up 3.7% from a year earlier, against 3.4% in August.

Core prices, which exclude food and energy, rose 0.3% in September, as in August, and were up 2.6% on the year, against 2.4% a month earlier. The gasoline index rose 9.1% in the month.

HTX Research said an election can change policy expectations but cannot directly lower the cost of holding positions.

Its base case is a period "characterized by elevated volatility, repeated repricing, and divergence across assets" rather than a rally driven by one political story.

The Senate rejected the market-structure bill 49 to 50

The U.S. Senate's roll call shows that a motion to end debate on proceeding to H.R. 3633, the digital commodities bill, was rejected on Sept. 15 with 49 yeas and 50 nays. Three-fifths of the Senate was required.

HTX Research called the vote a procedural setback rather than a repeal of any law. It said the effect on industry valuations comes mainly through the cost of delay.

Past midterms point to a pattern, not a promise

Schwab's analysis, which the report cites, found that since 1974 the S&P 500 averaged 5.7% over the three months after a midterm election, with 11 of 13 periods positive.

Over six months it averaged 12.4%, with all 13 positive. The figures cover price return only.

HTX Research said such samples describe a window and do not guarantee future returns. It added that bitcoin has too few comparable midterm years to support a reliable rule.

Two central bank meetings come before the Nov. 3 vote

The Fed's calendar lists a meeting on Oct. 27 and 28. The Bank of Japan's schedule shows a meeting on Oct. 29 and 30.

On Sept. 18 the Bank of Japan voted 7-2 to guide its overnight call rate to around 1.25%, effective Sept. 24. HTX Research said the two decisions can change dollar and yen financing conditions in quick succession.

What the data does not show

The report's data cutoff is Oct. 15. HTX Research said ETF flows show direction, not investor motives, and that dollar flows were not adjusted for fund size.

It said it assigns no probabilities to election outcomes and offers no price targets.

Report in numbers

Caption: ETF flows are daily Farside totals for U.S. spot funds summed by Equity Ledger; the combined figure is our calculation. Other rows are from the cited agencies.

How we reported this: We opened the report and checked its ETF, rate, inflation, vote and history figures at Farside, the Fed, BLS, the Senate, the Bank of Japan and Schwab. Flow sums are ours. Stablecoin figures were left out.