Unprecedented Bitcoin ETF Exodus Amidst Price Turmoil

On March 19, US spot Bitcoin exchange-traded funds (ETFs) encountered a notable setback, marking their largest collective outflow day on record. Bitcoin prices dipped to approximately $62,000 during US trading hours, prompting investors to withdraw a substantial $326 million from the 10 funds, reflecting growing unease in the market.

Bitcoin ETFs Face Outflows Amidst Market Turmoil: Grayscale's GBTC Vulnerable, BlackRock and Fidelity ETFs Buck Trend

Grayscale’s Bitcoin Trust (GBTC), the largest among the ETFs, reported over $23.7 billion in assets under management as of March 19. However, the fund experienced a net outflow of $443.5 million on the same day. If this trend persists, GBTC could exhaust its assets as soon as late July, raising concerns about the sustainability of Bitcoin ETF investments.

Despite widespread outflows, BlackRock, Fidelity, and Bitwise’s ETFs emerged as outliers, attracting net inflows amidst the market turmoil. BlackRock’s iShares Bitcoin Trust (IBIT) recorded the largest net inflow of $75.2 million, followed by the Fidelity Wise Origin Bitcoin Fund (FBTC) with $39.6 million. Conversely, Bitwise Bitcoin ETF (BITB) witnessed minimal net inflows of just $2.5 million, marking its lowest day on record, excluding days with zero new inflows.

The significant outflows observed on March 19 surpassed the previous high of $158.3 million on Jan. 24, marking a new record. This trend of net outflows has persisted for two consecutive days, signaling growing apprehension among investors amidst Bitcoin’s price volatility.

GBTC's Record Outflows Signal Investor Uncertainty in Bitcoin ETFs Amid Market Volatility

March 18 marked GBTC’s largest net outflow day of $642.5 million, contributing to nearly $12.9 billion in outflows since its transition from a trust to an ETF on Jan. 11. The sustained outflows raise questions about investor confidence in Bitcoin ETFs amidst heightened market uncertainty.

The correlation between Bitcoin’s price movements and ETF outflows underscores the influence of market sentiment on investment decisions. As Bitcoin prices experience fluctuations, investors appear to adjust their positions, leading to significant capital outflows from ETFs.