Wall Street’s spot bitcoin exchange-traded funds (ETFs) achieved a new record this week, but the celebratory mood might be dampened by another data point: five consecutive days of net outflows totaling a staggering $888 million.
This information comes courtesy of BitMEX Research, highlighting a potential shift in investor sentiment towards these recently launched financial instruments.
Outflows Outpace Inflows
The outflows were particularly pronounced on Monday, March 18th, with Grayscale’s industry-leading GBTC experiencing record-breaking redemptions. This negative trend continued throughout the week, with Blackrock’s IBIT, capturing nearly half the market share, witnessing historically low inflows. Wednesday and Friday saw IBIT receive a mere $49.3 million and $18.9 million, respectively. Fidelity’s FBTC, the third-largest player, also saw its inflows dwindle to a record low of $2.9 million on Thursday.
Reasons for the Exodus
While the outflows coincide with a recent pullback in bitcoin’s price, deeper factors might be at play. Bloomberg ETF analyst Eric Balchunas suggests Grayscale’s unusually high outflows could be linked to trading activity by digital asset firm Genesis.
Despite the net negative inflows, it’s important to note that trading volumes haven’t completely dried up. The cumulative volume across spot bitcoin ETFs still reached a significant $164 billion over the past week, reflecting a slight decrease from previous weeks.
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Is the Honeymoon Over for Bitcoin ETFs?
This recent trend raises questions about the long-term sustainability of these new investment vehicles. While the record milestone signifies growing institutional interest in bitcoin, the substantial outflows suggest a potential lack of conviction or a wait-and-see approach from investors.
The coming weeks will be crucial in understanding if this is a temporary blip or a sign of a more cautious stance towards bitcoin ETFs.
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