Spot Bitcoin ETFs Experience Notable Setback Amidst Record Year
Bitcoin ETFs Face Year-End Challenges
As the holiday season drew to a close, Bitcoin exchange-traded funds (ETFs) encountered their first negative weekly performance in several months, marking their most significant downturn since September. From December 23 to December 27, these crypto-based investment vehicles experienced notable outflows, with three consecutive days in the red. At the start of the week, Bitcoin ETFs registered a negative net flow of $564.94 million over the first two days. However, there was a glimmer of positive activity on December 26, as Bitcoin briefly rallied to the $98,000-$99,000 price range. During this surge, the ETFs saw a significant inflow of $475.5 million, marking their best-performing day amidst an otherwise negative streak. Unfortunately, the positive momentum was short-lived, as Friday witnessed outflows of $297.75 million, culminating in a total outflow of $862.69 million for the week. The net negative volume for Bitcoin ETFs was recorded at $387.54 million for the last week of 2024.
Spot Bitcoin ETFs Register Negative Performance
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The recent downturn marked the first negative week for spot Bitcoin ETFs since November. Fidelity’s FBTC emerged as the biggest loser of the week, with $208 million in outflows on Friday, making it the fund’s second-worst single-day performance in December. BlackRock’s IBIT followed closely with a negative net flow of $188.7 million. Meanwhile, ARK 21Shares’s ARKB recorded significant inflows, closing the week with $186.9 million. Despite the setbacks, FBTC had its best performance of the month earlier, achieving the largest inflows among all funds with $254.4 million on Thursday.
A Record-Breaking Year for Bitcoin ETFs
Despite recent challenges, Bitcoin ETFs have had a groundbreaking year, with investment products recording substantial outflows over the past two weeks, breaking a 15-day streak of inflows that saw total net assets surge from $100 billion to $120 billion. According to ETF specialist and Bloomberg analyst Eric Balchunas, the net assets of spot Bitcoin ETFs approached those of gold ETFs, which stood at $128 billion as of December 17. He highlighted the remarkable performance of these crypto-based products, noting that it is impressive to be discussing their proximity to gold ETFs after just 11 months in the market. Data from SoSoValue indicates that total outflows for Bitcoin ETFs have surpassed $1.8 billion, with total net assets decreasing to $106.68 billion since the onset of the negative performance.
Industry Insights and Future Prospects
Despite the recent downturn, Matthew Bartolini, Head of SPDR Americas Research at State Street Global Advisors, informed FOX Business that the global ETF industry is concluding its most successful year ever. The report highlighted the rise of active funds and the growing interest in new crypto-based investment products. Sumit Roy, senior ETF analyst for ETF.com, emphasized that the launch of new ETFs significantly contributed to this year’s exceptional performance. Balchunas previously remarked that Bitcoin ETFs serve as a “primer vehicle” for traditional investors and represent a “disruptive powerhouse” with a “spiritual connection” to Bitcoin, making them a robust long-term investment option. He stressed that the spot Bitcoin ETFs have demonstrated resilience during market downturns and are poised to continue exceeding expectations despite occasional setbacks. Notably, spot Bitcoin ETFs have defied all expectations this year, recording $35.65 billion in positive net flows throughout 2024, according to Farside Invest data.
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