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Bitcoin Spot ETFs Register Five-Day Withdrawals Streak Ahead of Halving

Apr 18, 2024
    The U.S. spot ETFs lost $4.3 million in outflows on Thursday, taking the five-day tally to over $319 million.GBTC again led the outflows, while inflows into BlackRock’s IBIT continued to slow.
On Thursdays, a total of $4.3 million was taken out from Bitcoin ETFs based in the United States that trade on the spot BTC market. This is an extension of the previous four days where investors have been withdrawing their funds, possibly due to anticipation surrounding the upcoming mining reward halving which is believed to be bullish.
Starting on April 12, there has been a net withdrawal of more than $319 million from ETFs, according to preliminary figures from Farside Investors. A significant portion of these withdrawals can be attributed to Grayscale’s GBTC.
On Thursdays, GBTC experienced a large withdrawal of approximately $90 million, but this was somewhat balanced by investments into Fidelity’s FBTC and BlackRock’s IBIT.
Since its inception, the Grayscale ETF has been experiencing losses due to multiple factors, such as its expensive fee arrangement. Consequently, outflows from GBTC should not raise alarm bells, but the more gradual inflows into other ETFs could be worth monitoring.

On Thursdays, the BlackRock IBIT drew in only $18.8 million, marking a significant decrease of 93% compared to its peak monthly intake of $308.8 million on April 5th.

“Key liquidity drivers, such as stablecoin growth and US-listed Bitcoin ETF inflows, have slowed down – as we have mentioned for several weeks. ETF flows peaked on March 12, and four consecutive days of net outflows have recently been seen. Demand for US-listed Bitcoin ETFs appears saturated, as even a 10-15% decline in Bitcoin prices has not increased net inflows,” Matrixport said in a market update early Friday.

Bitcoin Spot ETFs Register Five-Day Withdrawals Streak Ahead of Halving

At the current moment, Bitcoin was traded for around $64,700, representing a decrease of approximately 13% compared to its previous peak at over $73,500 recorded last month, according to CoinDesk’s figures.

Several reasons might explain the recent reversal in trends. Among these are U.S. tax payments, decreasing chances of Federal Reserve interest rate reductions, and heightened tensions between Iran and Israel.

In simpler terms, the potential danger in Middle Eastern politics could have led investors to buy Bitcoin as a safe haven. However, the Bitcoin prices dropped instead of rising during this time. This incident posed a challenge to Bitcoin’s reputation as a low-risk investment. Unfortunately, Bitcoin did not live up to expectations as its price remained stagnant and eventually decreased. (Matrixport’s statement paraphrased)

On late Friday, the Bitcoin blockchain will decrease the number of new coins created per block from 6.25 to 3.125 Bitcoins. This means that the production of new coins will be cut in half, slowing down the growth of the total supply by 50%. Previously, such reductions have been followed by price increases, although the size and length of these uptrends have varied.

In the world of cryptocurrencies, many believe that the upcoming halving will lead to a prolonged bull market. Yet, some experts, such as Goldman Sachs and JPMorgan, have raised opposing views, with JPMorgan indicating a possible significant drop in prices following the halving event.

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2024-04-19 12:21