BlackRock Bitcoin ETF Sees Record $420M Outflow as BTC Hits Yearly Lows

Investors in BlackRock’s iShares Bitcoin Trust (IBIT) pulled a record $420 million from the fund in a single day, coinciding with BTC sharp drop to yearly lows. The spot BTC fund shed 5,000 BTC on Feb. 26, marking its largest-ever daily outflow and surpassing the $332 million it lost at the start of the year.

BlackRock Investors Rush for the Exit

The sell-off follows a brutal stretch for Bitcoin investment products, with Feb. 24 recording over $1.1 billion in combined outflows. Over the past seven trading sessions, nearly $3 billion has exited Bitcoin ETFs, signaling widespread investor caution. The broader impact of BlackRock’s outflow was felt across the market, bringing the day’s total outflow to $756 million, as per CoinGlass.

Despite the grim numbers, ETF Store President Nate Geraci downplayed the concern, calling it a “shorter-term blip.” Meanwhile, other major Bitcoin ETFs weren’t spared either. Fidelity’s Wise Origin Bitcoin Fund (FBTC) witnessed another $145.7 million in redemptions, extending its own seven-day outflow streak. Other issuers, including Bitwise, Ark 21Shares, Invesco, Franklin, WisdomTree, and Grayscale, also reported outflows ranging between $10 million and $60 million.

Bitcoin Correction or Market Panic?

The cryptocurrency market took a further hit, with total capitalization shrinking by 5.6% to $2.9 trillion. Bitcoin itself plunged to $82,455 on Feb. 26, marking a 25% correction from its all-time high in December. In total, $1 trillion has evaporated from the crypto space since the peak, leaving traders and investors rattled.

However, some analysts remain unfazed. Ki Young Ju, CEO of CryptoQuant, cautioned against panic selling, reminding investors that similar corrections have occurred in past bull cycles. “A 30% correction in a Bitcoin rally is normal. It dropped 53% in 2021 and still hit new highs,” he said.

Meanwhile, industry veterans like BitMEX co-founder Arthur Hayes and 10x Research’s Markus Thielen believe that the mass exodus from Bitcoin ETFs is largely driven by hedge funds rather than long-term BTC believers. These funds, which initially sought arbitrage yields, are now exiting as those opportunities dry up. Hayes even projected that Bitcoin could dip further to $70,000 if ETF outflows persist.