Bitcoin ETFs Record Substantial Outflow Day
As the month commenced, US-listed spot Bitcoin (BTC) exchange-traded funds (ETFs) encountered a challenging start, witnessing two consecutive days of outflows. Despite this rocky beginning, these investment products had shown impressive performance throughout October with four straight weeks of positive net flows, even exceeding the $2 billion mark on two occasions.
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In the preceding week, Bitcoin ETFs amassed $2.2 billion in inflows, marking a triumphant fourth consecutive week of positive results. However, from October 30 to October 31, the momentum waned significantly. Bitcoin’s price volatility contributed to a drastic reduction in net flows, plunging from $893.3 million to a mere $32.3 million in inflows.
The downturn continued as BTC ETFs experienced their first negative day since October 22, with $54.9 million exiting the funds, ending their seven-day winning streak. The start of this week brought more challenges, as Bitcoin-based investment products reported the second-largest single-day net outflow since their inception in January.
The largest outflow was recorded on May 2, with a staggering $563 million withdrawn. This Monday, Bitcoin ETFs faced $541.1 million in outflows. Notably, Bitwise’s BITB, AKR Invest’s ARKB, and Grayscale’s Mini Trust (BTC) experienced record outflow days on November 4.
Details of Recent Outflows
According to Farside Investors, BITB and BTC registered outflows of $79.8 million and $89.5 million respectively, while ARB saw a significant $138.3 million in negative net flows. Fidelity’s FBTC led the day’s losses with $169.6 million in outflows, marking its second worst-performing day.
Interestingly, BlackRock’s IBIT stood out as the only BTC ETF to report a positive net flow, with $38.4 million in inflows.
BTC ETFs Poised for Continued Growth
The substantial outflows from Bitcoin ETFs occurred just a day before the US elections, a period marked by heightened market volatility and speculation. Experts suggest that the uncertainties surrounding the election outcome have played a significant role in affecting these investment products.
In an interview, Bloomberg analyst Eric Balchunas emphasized the potential impact of the election on Bitcoin’s price movements and ETF performance. Despite the current challenges, he remains optimistic about the long-term prospects of BTC ETFs, highlighting that their net flow of $29 billion reflects resilience through various downturns this year. He anticipates that Bitcoin ETFs will exceed expectations in their inaugural year, even if the election results introduce further market instability.
Balchunas regards ETFs as the “premier vehicle” for traditional investors, citing their strong alignment with Bitcoin’s disruptive potential. This synergy, according to the analyst, establishes Bitcoin ETFs as a formidable long-term investment.
Market Experts Weigh In
Matt Hougan, Bitwise’s Chief Investment Officer, echoes the sentiment of optimism, asserting that the outcome of the elections will not deter the progress of cryptocurrencies. He suggests that a Trump victory could be favorable for the market in the short term. However, he remains bullish even if a Democratic sweep occurs, stating that “Washington can’t stop crypto.”
Hougan is confident that spot crypto-based ETFs will continue to attract inflows, and the industry will persist in its growth trajectory, irrespective of temporary market slowdowns.
As of now, Bitcoin is trading at $68,738, reflecting the ongoing dynamics in the cryptocurrency market.
