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Spot US Bitcoin ETFs experienced their largest daily net outflow ever Tuesday, amounting to at least $1.01 billion, affecting 10 out of 12 spit Bitcoin funds. This happened as the price of Bitcoin continued trading below $90,000.
According to data from SoSoValue, the Fidelity FBTC led the bloodbath with at least $344.65 million, followed by BlackRock’s IBIT fund, which experienced an outflow of over $164.3 million.
Two ETFs Yet to Disclose Impact
The US Bitcoin ETFs exodus likely triggered the bloodbath that saw the flagship cryptocurrency lose at least 3.4% of its value overnight to reach a low of $86,140 from a high of over $92,000 during trading on Tuesday.
According to available data, the Bitwise Bitcoin ETF (BITB) experienced outflows of $88.3 million, while Grayscale’s two funds net lost over $151.9 million. Out of this amount, $66.1 million was from Grayscale Bitcoin Trust (GBTC), while $85.8 million was from its Bitcoin Mini Trust ETF (BTC).
The report further shows that Franklin Templeton’s EZBC, Grayscale’s GBTC, and Invesco’s BTCO also did not spare the outflows affecting the spot US Bitcoin ETFs. By the time of writing, Ark Invest and 21Shares’ ARKB were yet to disclose their outflow data, meaning that the outflow was most likely worse than recorded.
The downturn has Erased Trump-Pump.
The massive net outflow affecting US Bitcoin ETFs comes hot on the heels of a broad market downturn that has erased the Trump Pump that has ruled since Donald Trump won the presidency on November 5, 2024. The bloodbath saw the king of crypto trade at its lowest point this year, with Ether and other altcoins like Solana and XRP following suit. Commenting on the development, the head of research at Presto Research, Peter Chung, stated:
“BTC’s drop below $90K seems to be an extension of broader risk-off trades, reflected in weak Nasdaq futures, a stronger JPY, and firm 10Y Treasury yields.”
The latest US Bitcoin ETFs outflow has exceeded the previous record of December 19, 2024, when a similar outflow saw at least $671.9 million due to Bitcoin’s price correction from an all-time high of over $108,000. Records suggest that the US Bitcoin ETFs have experienced a consecutive net outflow of at least $2 billion over the past six days.
Factors Leading to Bloodbath
According to BTC Markets Crypto Analyst Rachael Lucas, several factors could have contributed to the mass outflows that have affected the US Bitcoin ETFs and the possibility of an institutional rebalancing of positions. Lucas observed:
“One key factor appears to be profit-taking after Bitcoin’s strong performance in 2024 […] after a rally of that magnitude; it’s natural to see investors lock in gains, especially as the New Year has started with softer momentum.”
Investors on Edge
The expert also believes that macroeconomic factors surrounding concerns about the U.S.-China trade outlook or expectations about the recent Federal Reserve’s interest rate decisions may have kept crypto investors on edge. Lucas further explained:
“If rates stay higher for longer, that raises the cost of capital and reduces liquidity, dampening demand for risk assets like bitcoin.”
Conclusion
The latest US Bitcoin ETF outflows have shown the potential to put a short-term dent in Bitcoin’s price, but experts believe that it may not necessarily lead to bearish sentiments. The price action of digital assets is driven by a combination of factors, including on-chain activity, spot demand, and derivative positioning. At the time of writing, Bitcoin was trading at $88,404.
Frequently Asked Questions (FAQs)
What is are US Bitcoin ETFs?
US Bitcoin ETFs are financial products that tracks Bitcoin’s performance. Investors gain exposure to BTC without directly purchasing or managing Bitcoin itself.
How do Bitcoin ETFs work?
Bitcoin ETFs hold Bitcoin or Bitcoin futures contracts as their underlying asset, and their value mirrors Bitcoin’s price, enabling investors to benefit from price movements.
What are the risks involved in Bitcoin ETF investment?
Like any investment, US Bitcoin ETFs have potential risks. The cryptocurrency market is volatile, and price fluctuations usually affect the ETF’s value.
What is the Best Bitcoin ETF?
Choosing the best US Bitcoin ETFs depends on your financial goals, investment knowledge, and risk appetite.
Appendix: Glossary of Key Terms
Bitcoin: A cryptocurrency designed to act as money and a form of payment outside the control of any one person, group, or entity.
Bitcoin ETF: A publicly traded security offering exposure to the price movements of bitcoin futures contracts.
Trump-Pump: The Bitcoin price surge followed Donald Trump’s 2024 election victory.
Volatility: The degree of price fluctuation or rapid and unpredictable changes in the price of cryptocurrencies over time.
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