The U.S. spot Bitcoin exchange-traded funds (ETFs) have witnessed their largest-ever daily outflow, with investors pulling out a staggering $937.9 million on February 25, according to CoinGlass data. This marks the sixth consecutive trading day of outflows, contributing to over $2.4 billion in net exits for February.
Bitcoin Price Dips Below $90K Amid ETF Sell-Off
Bitcoin (BTC) has been struggling to maintain its momentum, dipping 3.4% in a single day. The price fell from an intraday high of over $92,000 to a 24-hour low of $86,140. As a result, investor sentiment around Bitcoin ETFs has taken a hit, prompting further outflows from major funds.
Fidelity, BlackRock, and Grayscale Lead ETF Losses
Among the 11 Bitcoin ETFs, the Fidelity Wise Origin Bitcoin Fund (FBTC) faced the steepest losses, recording a record-breaking $344.7 million outflow. BlackRock’s iShares Bitcoin Trust (IBIT) followed with a $164.4 million withdrawal. Other notable exits included:
- Bitwise Bitcoin ETF (BITB): $88.3 million
- Grayscale Bitcoin Trust (GBTC): $66.1 million
- Grayscale Bitcoin Mini Trust ETF: $85.8 million
Traditional Finance’s Reluctance Towards Crypto
The sharp outflows highlight the continued skepticism among traditional financial (TradFi) investors toward Bitcoin and cryptocurrencies. ETF Store President Nate Geraci commented on the trend, noting the persistent negative sentiment from institutional investors despite Bitcoin’s long-term resilience.
Are Hedge Funds Driving Bitcoin ETF Outflows?
Industry experts, including BitMEX co-founder Arthur Hayes and 10x Research head Markus Thielen, suggest that hedge funds rather than long-term investors primarily drive Bitcoin ETF activity. Many hedge funds engage in arbitrage strategies, shorting Bitcoin futures while going long on ETFs to capitalize on short-term yields.
#Bitcoin goblin town incoming:
— Arthur Hayes (@CryptoHayes) February 24, 2025
Lots of $IBIT holders are hedge funds that went long ETF short CME future to earn a yield greater than where they fund, short term US treasuries.
If that basis drops as $BTC falls, then these funds will sell $IBIT and buy back CME futures.
These… pic.twitter.com/3PskTxrBPR
Hayes predicts that Bitcoin could drop to $70,000 as these funds unwind their positions. Thielen, however, argues that the unwinding process remains market-neutral since it involves selling ETFs while simultaneously purchasing Bitcoin futures, balancing out market impact.
What’s Next for Bitcoin and ETFs?
While February has seen significant ETF sell-offs, Bitcoin’s long-term trajectory remains a topic of debate. With increasing regulatory clarity and institutional adoption, the future of Bitcoin ETFs will hinge on shifting investor sentiment and macroeconomic conditions.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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