As a researcher with a background in finance and experience observing the cryptocurrency market, I find the recent trend of record-breaking outflows from U.S. spot Bitcoin exchange-traded funds (ETFs) and the subsequent market downturn concerning but not entirely unexpected. The coinciding decline in bitcoin’s price adds to the uncertainty that has been present since the aftermath of the 2022 FTX collapse.
In the past week, there has been a significant pattern emerging in the US Bitcoin exchange-traded funds (ETFs). This trend is characterized by a series of six consecutive days with net withdrawals. Yesterday marked the first time BlackRock’s IBIT ETF experienced this type of outflow.
I’ve noticed that this development occurs during Bitcoin’s toughest month since the FTX implosion in 2022. Over the past week, Bitcoin has experienced a significant drop of approximately 11%.
Record Breaking Outflows and Market Downturn
Based on information from Farside Investors, there was a withdrawal of $36.9 million from BlackRock’s Bitcoin fund on May 1st. Simultaneously, these nine other ETFs experienced a collective outflow amounting to $526.8 million on the same day.
As a crypto investor, I’ve noticed some significant outflows from two popular Bitcoin investment funds on a particular day. The Fidelity Wise Origin Bitcoin Fund (FBTC) experienced the largest withdrawal at $191.1 million, while Grayscale Bitcoin Trust (GBTC) had an outflow of approximately $167.4 million.
As a financial analyst, I’ve noticed that on a particular day, ARK 21Shares and Franklin Bitcoin ETFs experienced significant withdrawals of $98.1 million and $13.4 million respectively. These outflows represented the largest single-day withdrawal for U.S.-listed spot Bitcoin ETFs.
In the larger market scenario, Bitcoin’s value has dropped by over 10% this week based on CoinGecko’s data. After a drop on Tuesday, Bitcoin and the overall cryptocurrency market are poised to end their seven-month winning streak, signifying their most substantial monthly decrease since the crypto exchange FTX faced collapse in November 2022.
By the close of April, Bitcoin experienced a significant decline of more than 16%, while Ethereum suffered an 18% loss in value. The downturn was even more pronounced for lesser-known cryptocurrencies: popular altcoins such as Solana (SOL), Dogecoin (DOGE), and Avalanche (AVAX) endured drops of approximately 35% to 40%.
The cryptocurrency market’s overall value has dropped by approximately 18% in total, which represents its most significant decrease since June 2022. Currently, bitcoin is priced at around $57,600, whereas the majority of alternative cryptocurrencies have shown better performance.
Analysts Weigh In
In spite of the obstacles, James Seyffart, an ETF analyst at Bloomberg, asserts that Bitcoin spot ETFs are functioning effectively overall. He underscores that inflows and outflows are a regular aspect of an ETF’s operation.
These ETFs function effectively with regular inflows and outflows being a normal aspect of their operation.
— James Seyffart (@JSeyff) May 2, 2024
In agreement with Nate Geraci, the president of ETF Store, it’s important to note that price swings are a typical occurrence in Exchange-Traded Funds (ETFs).
I’ve noticed an intriguing contrast between the price surges of gold and the outflows from gold-backed ETFs like the iShares Gold ETF and SPDR Gold ETF this year. Despite substantial outflows totaling over $4 billion collectively, gold prices have still risen by 16% year-to-date.
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2024-05-02 13:34