On March 19, United States spot Bitcoin exchange-traded funds (ETFs) faced a significant setback, marking their largest collective outflow day on record. As Bitcoin prices dipped to approximately $62,000 during U.S. trading hours, investors pulled out a staggering $326 million from the 10 funds, reflecting a growing unease in the market.
Grayscale’s GBTC nearing depletion amidst continued outflows
Grayscale’s Bitcoin Trust (GBTC), the largest among the ETFs, reported over $23.7 billion in assets under management as of March 19. However, the fund experienced a net outflow of $443.5 million on the same day. If this trend persists, GBTC could exhaust its assets as soon as late July, raising concerns about the sustainability of Bitcoin ETF investments.
Despite the widespread outflows, BlackRock, Fidelity, and Bitwise’s ETFs emerged as outliers, attracting net inflows amidst the market turmoil. BlackRock’s iShares Bitcoin Trust (IBIT) recorded the largest net inflow of $75.2 million, followed by the Fidelity Wise Origin Bitcoin Fund (FBTC) with $39.6 million. Conversely, Bitwise Bitcoin ETF (BITB) witnessed minimal net inflows of just $2.5 million, marking its lowest day on record, excluding days with zero new inflows.
The significant outflows observed on March 19 marked a new record, surpassing the previous high of $158.3 million on Jan. 24. This trend of net outflows has persisted for two consecutive days, signaling a growing apprehension among investors amid Bitcoin’s price volatility.
The recent decline in Bitcoin prices, which plummeted to $62,400 on March 19, following an all-time high of $73,835 on March 14, has further fueled concerns in the market. With a 5.4% decrease in the last 24 hours, Bitcoin is trading at $61,173, hovering just above its intraday low of $60,872.
Implications of continued outflows and price volatility
March 18 marked GBTC’s largest net outflow day of $642.5 million, contributing to nearly $12.9 billion in outflows since its transition from a trust to an ETF on Jan. 11. The sustained outflows raise questions about investor confidence in Bitcoin ETFs amidst heightened market uncertainty.
The correlation between Bitcoin’s price movements and ETF outflows underscores the influence of market sentiment on investment decisions. As Bitcoin prices experience fluctuations, investors appear to adjust their positions, leading to significant capital outflows from ETFs.
