Bitcoin ETFs Experience Record $328M Outflows, Raising Concerns for Future

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A total of $328 million outflow was recorded for the week ending April 26, 2024, in the volume of Bitcoin spot exchange-traded funds (ETFs) in the United States. This massive withdrawal of funds coincided with a broader downturn in the crypto market.

Significant Fluctuations in Weekly Net Flows

The trend raises questions about the future of Bitcoin ETFs and the cryptocurrency’s price trajectory post-halving. All through the week, spot Bitcoin ETFs witnessed considerable fluctuations in net flows.

There were robust inflows in the early days of the week totaling $62.02 million across various Bitcoin ETFs. However, by Wednesday, April 24, the trend had shifted in line with market sentiments, resulting in a net outflow of $120 million.

Market Sentiments Propel Outflows

The substantial outflows continued into Thursday, April 25, reaching a staggering $217 million across all 10 spot Bitcoin ETFs. Grayscale’s GBTC took the lead, accounting for the largest share of outflows at $140 million. Fidelity’s FBTC emerged with the highest net inflow, but this was overshadowed by the broader market trend of withdrawals.

The downward trend persisted on Friday, April 26, with net outflows totaling $83.6 million. Grayscale’s GBTC saw reduced outflows compared to previous days, while Ark 21Shares’ ARKB was the only ETF to record a modest inflow of $5.4 million. In spite of the slight positive note, the week ended with a total outflow of $328 million, marking a dramatic shift in Bitcoin ETF sentiment.

Impact of DTCC’s Policy on ETF Collateral

The steep outflows from Bitcoin ETFs have incited speculation about their future, particularly following a recent report indicating declining interest in the investment vehicle. The uncertainty is also fueled by Depository Trust Company (DTCC)’s announcement regarding the valuation of collateral for ETFs containing Bitcoin or other cryptocurrencies. This has contributed to investor unease in the crypto space.

Meanwhile, a report from 10X Research indicates that the DTCC’s decision to impose a 100% haircut on ETFs with cryptocurrency exposure, beginning from April 30, has had a cascading effect throughout the digital asset market.

The DTCC’s action, which involves withholding collateral value from ETFs featuring cryptocurrencies as underlying assets, has sent shockwaves through the market.

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