According to Bloomberg data, Bitcoin’s 10 exchange-traded funds have seen their largest three-day outflows since launching on Jan. 11, a reversal of the staggering inflows that helped push the token to an all-time high of $72,000 last week.
So far this week, more than $742 million has flowed out of funds, due to $1.4 billion in outflows from the Grayscale Bitcoin Trust this week alone, as well as a slower rate of inflows into BlackRock and Fidelity offerings, the second and the third most popular product, respectively.
Grayscale outflows are greater than slowing inflows from new bitcoin ETF issuers, more so since launch. Net outflows from U.S. issuers total $749 million so far this week. pic.twitter.com/Z3Uge8VR32
— James Butterfill (@jbutterfill) March 21, 2024
“It’s not unusual to see ETF flows move based on price action in the underlying asset class, and Bitcoin has retreated recently. As successful as they have been, spot Bitcoin ETFs won’t be sucking in new money every single day.” , said Nate Geraci, president of the ETF Store Fortune.
The recent increase in GBTC outflows likely stems from earlier investors looking to lock in gains after Bitcoin recently hit all-time highs, said Robert Le, crypto analyst at Pitchbook Fortune.
“The Grayscale team anticipated that GBTC’s diverse shareholder base would engage in investment strategies that would impact the Trust’s flows, including harvesting earnings, engaging in arbitrage trades, and liquidating actions to repay creditors in various bankrupt properties,” Grayscale said in a statement.
Geraci notes that many registered investment advisors (RIAs) and institutional investors “have yet to dip their toes” into funds, because they are “extremely methodical” in how they allocate funds. As a result, he estimates, the main driver of flows so far have been retail investors and traders “who are much more likely to enter and exit positions”.
$GBTC getting a “second wind” of outflows, $1.4 billion this week, now doubles any other ETF in year-to-date outflows and has set the record for cumulative outflows for any ETF in history. All that and they STILL rank 3rd overall (out of 3,400 ETFs) in terms of annual revenue generated. https://t.co/HitMwpu7dR
— Eric Balchunas (@EricBalchunas) March 21, 2024
Indeed, according to data from Bloomberg senior ETF analyst Eric Balchunas, BlackRock’s iShares Bitcoin Trust (IBIT) averages 250,000 trades per day, with an average trade size of 326 shares, about $13,000, suggesting that such operations were carried out by retailers. investors, Balchunas said CoinDesk.
Because of RIAs’ responsibilities to clients and the due diligence required, “it looks like it will take a while” before others start recommending Bitcoin-related products to clients, Pitchbook’s Le notes. Meanwhile, moves by retail traders will continue to have a larger effect on prices.
“It’s going to take time for real institutions and asset managers and advisors to start buying these things for their clients,” said Bloomberg analyst James Seyffart Fortune. “We don’t know yet how much demand there will be from that channel, but there is likely to be demand in the future.”
Despite the recent outflows, ETFs overall have seen net inflows of more than $11.4 billion so far, making their debut among their most successful ever, Bloomberg reported.
Bitcoin was trading around $65,800 around 2pm ET on Thursday afternoon, about $6,000 lower than its all-time high on March 14. On Wednesday, Bitcoin fell to nearly $61,000, a 16% drop from its all-time high a week earlier, traders showed. they were waiting to hear the results of the Federal Reserve meeting, namely whether interest rates would be cut. (Rates remained unchanged.)