Bitcoin exchange-traded funds (ETFs) in the United States recently observed a noteworthy trend, marked by a period of six consecutive days of outflows. Notably, BlackRock's IBIT ETF experienced its first case of outflows just yesterday.
This development coincides with Bitcoin going through its most challenging month since the aftermath of the FTX crash of 2022, posting a notable 11% decline during the week.
Record-breaking outflows and market decline
according to Data From Farside Investors, BlackRock's Bitcoin fund saw its first outflow of $36.9 million on May 1, while the other nine ETFs combined recorded an outflow of $526.8 million on the same day.
The largest outflow of the day was observed in the Fidelity Wise Origin Bitcoin Fund (FBTC), which saw net outflows of $191.1 million. Grayscale Bitcoin Trust (GBTC) followed closely behind with an outflow of $167.4 million.
The ARK 21Shares and Franklin Bitcoin ETFs saw outflows of $98.1 million and $13.4 million, respectively, contributing to the largest outflow day for a U.S. Bitcoin ETF.
In the context of the broader market, the price of Bitcoin fell more than 10% this week, as did CoinGecko Data Indicates. After Tuesday's decline, Bitcoin and the broader cryptocurrency market are set to break their seven-month winning streak, marking their biggest monthly decline since November 2022, when cryptocurrency exchange FTX collapsed.
Bitcoin fell more than 16% by the end of April, while Ethereum saw an 18% drop in value. Smaller cryptocurrencies faced higher declines, with popular altcoins such as SOL, Dogecoin (DOGE), and Avalanche (AVAX) seeing declines ranging from 35% to 40% throughout April.
Overall, the overall market capitalization of the cryptocurrency market has shrunk by approximately 18%, representing its largest decline since June 2022. At the time of writing, Bitcoin is trading at $57,600 while most altcoins are performing better.
Analysts weigh in
Despite these challenges, Bloomberg ETF analyst James Seyphart asserts that spot Bitcoin ETFs are “running smoothly across the board,” stressing that inflows and outflows are part of the life cycle of ETFs.
I must add that these ETFs perform smoothly across the board. Inflows and outflows are part of the norm in the life of an ETF.
– James Seyff (@JSeyff) May 2, 2024
Echoing this sentiment, ETF Shop President Nate Geraci emphasized that such fluctuations are normal for ETFs.
He compared it to the outflows experienced by traditional assets such as gold ETFs, Pointing Data indicate that metal prices rose by 16% from the beginning of the year to date, despite large outflows. This year, the iShares Gold ETF and SPDR Gold ETFs saw outflows of $1 billion and $3 billion, respectively.
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