Bitcoin ETFs Bounce Back with Strong Inflows, Overcoming GBTC Losses

After facing significant outflows the previous week, crypto products, particularly bitcoin exchange-traded funds (ETFs), rebounded with a notable $708 million in inflows last week, according to data from CoinShares. This positive trend reversed the outflows of approximately $500 million experienced in the week ending January 26.

Key Players: BlackRock and Fidelity Lead Inflows

BlackRock and Fidelity emerged as the main beneficiaries, with $884 million and $674 million in inflows, respectively. The surge in assets for their bitcoin funds offset the outflows from the Grayscale Bitcoin Trust ETF (GBTC), which experienced a substantial reduction from roughly $2.2 billion outflows to $927 million.

The iShares Bitcoin Trust (IBTC), launched alongside nine other spot bitcoin ETFs on January 11, has quickly grown to over $3 billion in assets. Notably, its daily trading volumes surpassed those of GBTC on February 1.

The Fidelity Wise Origin Bitcoin Fund (FBTC) has accumulated an asset base of about $2.6 billion, contributing to the positive trend in bitcoin ETF flows.

Changing Landscape: GBTC vs. New Entrants

While GBTC still manages a significant amount of assets, around $20.5 billion, the gap has decreased in recent days. The data from BitMEX Research reveals that the 10 US spot bitcoin ETFs recorded net inflows for six consecutive days, peaking at $247 million on January 30.

Bloomberg Intelligence analyst Eric Balchunas noted the resilience of the new ETFs, stating that their strong performance in the third week, with inflows every day, indicates their enduring popularity.

January Inflows and Short-Term Outlook

The last few days of January saw particularly robust inflows, averaging $194 million daily. However, the first two days of February witnessed a slight decrease to an average of $59 million in inflows. Analysts, including David Lawant from FalconX, remain optimistic about the medium to long-term outlook, expecting inflows to outweigh short-term outflows.

Conclusion:

Bitcoin ETFs, led by BlackRock and Fidelity, recover from the previous week's outflows, demonstrating resilience and sustained interest. The positive trend signals potential long-term strength in the market, with new entrants challenging the dominance of established players like GBTC.