Bitcoin ETF Overview: Recent Outflows as Price Growth of BTC Halts
Last week, US-based Bitcoin Exchange Traded Funds (ETFs) experienced net outflows, a development that’s only been witnessed twice since its inception three months ago. From April 8 to April 12, these 11 funds saw a withdrawal of $83 million, a stark contrast to the $485 million net inflows of the previous week. Since January 11, spot Bitcoin ETFs have cumulatively welcomed $12.5 billion in positive contributions.
Grayscale Bitcoin Trust ETF Witnesses Outflows
Despite the overall gains, the Grayscale Bitcoin Trust ETF (GBTC) has persistently seen outflows. GBTC saw $767 million exiting last week alone. However, other well-performing funds like BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) had net inflows of $487 million and $90 million respectively, though they weren’t able to offset GBTC’s negative net flows entirely.
Key takeaways
- US spot Bitcoin ETFs recorded $83 million of net outflows between 8 and 12 April, only the third negative week in the products' first three months.
- That reversed $485 million of net inflows the week before; cumulative inflows since 11 January still stood at $12.5 billion.
- Grayscale's GBTC continued to bleed, losing $767 million in the week, which BlackRock's IBIT at $487 million and Fidelity's FBTC at $90 million could not fully offset.
- Bitcoin fell roughly 5% to $65,650 by Friday and dropped below $62,000 on Saturday, after peaking above $73,500 on 14 March.
- CoinShares' James Butterfill noted ETF and ETP activity fell from 40% of volume on credible exchanges over the prior month to 31% that week.
History of Bitcoin Fund Outflows and Performance
Previously, the Bitcoin fund segment experienced only two significant weeks of net outflows. One such dip happened between January 22-26 with $417 million loss, and another more substantial drop of $888 million between March 18-22. The week of March 11-15 reported the highest inflow, with the segment receiving a whopping $2.5 billion.
Influence of Bitcoin’s Price on Funds
The recent withdrawals coincide with a weak financial week for Bitcoin, which saw a price reduction of roughly 5%, to $65,650 by Friday. The cryptocurrency’s price further plunged below $62,000 on Saturday. Matteo Greco, a research analyst at Fineqia, interprets this net outflow from US Bitcoin ETFs as indicative of “increased profit-taking and investor caution” following an upbeat trend over the last two quarters. Greco also pointed out that last week’s trading volumes were about standard, averaging around $3.2 billion daily.
Uncertainty Lingers Amongst Investors, Postures Bitcoin
James Butterfill, head of research at CoinShares, agrees with this stance. He identified a growing hesitance amongst investors as Bitcoin’s positive price momentum came to a halt last week. Having reached an impressive all-time high worth more than $73,500 on March 14 and a stable figure above $72,000 up until April 8, Bitcoin’s price is now dropping. As of 7:30 am ET on Monday, Bitcoin was priced around $66,200, representing a decline of approximately 4.5% since last week.
Butterfill also indicated that the ETF and ETP activities had slowed down as a percentage of the total trade volume on credible exchanges, falling from 40% over the last month to 31% last week. This decline exemplifies the prevailing caution amongst investors.
Frequently asked questions
Why does GBTC keep losing money while others gain?
GBTC converted from an existing trust rather than launching fresh, so it began with a large pool of holders who could finally exit or rotate into cheaper products. Its outflows reflect that unwinding rather than weak demand for Bitcoin ETFs generally.
How significant were these outflows historically?
Modest. The $83 million withdrawn was far smaller than the $417 million lost between 22 and 26 January or the $888 million between 18 and 22 March, against a record $2.5 billion inflow in the week of 11 to 15 March.
What did analysts attribute the shift to?
Fineqia's Matteo Greco read it as increased profit-taking and investor caution after two strong quarters, with trading volumes otherwise normal at around $3.2 billion daily.
