- Bitcoin ETFs mark its longest streak of net outflows.
- BlackRock and Fidelity feel the sting of record-low inflows.
- Concerns of Bitcoin dropping more linger.
Earlier this year, spot bitcoin ETFs set off a speculative frenzy, attracting billions of dollars into the investment vehicle and setting new records every week since its approval on January 10.
This mania helped propel Bitcoin to a new all-time high of $74,000 in March, flaring hopes of a sustained bull run.
However, unlike in the recent past, traders appear less than thrilled as the market takes an unexpected nosedive, with Bitcoin dropping to $60,800. As the reigning crypto king struggles with price action, uncertainty ripples through the ETF market, signaling a concerning trend.
Bitcoin ETFs’ Dismal Week
Ten Bitcoin ETFs wrapped up the trading week with a worrying exit, witnessing outflows exceeding a whopping $800 million. The spotlight of this capital exodus shone brightest on Monday, March 18, as Grayscale’s GBTC saw a record-breaking tidal wave of outflows, setting the tone for the week. This five-day spree of outflows marks the longest seen thus far, beating a four-day streak from January of this year.
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In lockstep with Bitcoin’s uphill battle to reclaim its previous all-time high and showcase strength, the strong outflows were matched by weak inflows. BlackRock’s IBIT, which commands nearly half the market, first saw a historic low in inflows on Wednesday, March 20, recording $49.3 million. However, outflows plummeted further on Friday to a paltry $19 million in new capital.
Fidelity’s FBTC, the third-largest spot bitcoin ETF, also felt the sting of record-low inflows this week, securing only $2.9 million on Thursday, March 21.
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Bloomberg ETF expert Eric Balchunas highlights that while the strong outflows correspond with Bitcoin’s underwhelming performance, Genesis’ proposed sale of $1.3 billion GBTC shares is also a culprit.
Still, despite the ETFs bleeding out funds, trading volumes remained unwavering, clocking in at $164 billion in the past week.
Bitcoin Concerns Linger
Experts have brushed off Bitcoin’s current struggles as another correction, pointing to historical patterns. Data suggests that BTC typically retraces by at least 20% over two weeks whenever it hits a new all-time high.
While the FOMC’s dovish outlook has provided some reprieve, leading to Bitcoin retracing significantly from its local bottom and trading at $65,000 at press time, concerns about revisiting liquidity below $60,000 linger.
Market retracements require time to mature fully, spanning anywhere from two weeks to two months. Yet Bitcoin’s recent tumultuous journey lasted just a week.
Should Bitcoin maintain its rally in the weeks leading up to the halving slated between April 12 and 16, concerns of approaching $58,000 can take a break. However, should it falter, the liquidity at the level is likely to be swept.
On the Flipside
- It is unreasonable to expect BTC ETFs to record positive flows every day.
- MicroStrategy and ETF issuers bought at least $1.5 billion worth of Bitcoin as it approached $60,000.
- Historically, Bitcoin prices retrace 14-28 days before the halving. With 25 days left until the halving, likely, the event has already been priced in.
Why This Matters
Bitcoin ETFs ending a day with net outflows is not concerning; however, wrapping up a trading week can be worrisome. The outflows in the previous week provide a glimpse into how unpredictable markets can be and what investors should expect with deep pullbacks, as seen recently.
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