Bitcoin ETFs lose $635M in one day as BTC rally slows

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Bitcoin ETFs lose $635M

Why funds are leaving Bitcoin

Analysts link the decline to renewed inflation concerns in the United States. At the same time, the broader stock market has so far largely ignored these macroeconomic risks: the Nasdaq and S&P 500 indices hit record highs on Wednesday.

The $635 million outflow is difficult to dismiss as an insignificant signal for bulls. This is especially true given that strong inflows in March and April had previously been seen as one of the main drivers of bitcoin’s rise. Now, however, the macroeconomic backdrop is deteriorating as inflation in the US accelerates.

“Persistently high inflation, a Fed led by Warsh, whom markets perceive as more hawkish on monetary policy, or another oil shock could put pressure on bitcoin even with positive net inflows. From our perspective, the more important question is not whether the growth phase will continue, but whether macro conditions will remain loose enough for capital flows to do their work,” said Adam Haeems, head of asset management at Tesseract Group. Tesseract manages more than $500 million in assets.

However, the link between ETF flows and bitcoin’s price dynamics no longer looks as direct as before. This is also confirmed by correlation analysis.

The 90-day rolling Pearson correlation coefficient between bitcoin’s daily return and the daily change in cumulative net ETF inflows now stands at just 0.16. This figure is statistically almost indistinguishable from zero and significantly below the peak of 0.68 recorded in February.

In simple terms, the direction of daily ETF flows is now unlikely to help predict where BTC will move next. Still, large outflows like the one seen on Wednesday remain an important signal for the market.

The most popular Bitcoin ETFs

The largest spot bitcoin ETFs in the US remain the funds from BlackRock and Fidelity. BlackRock’s iShares Bitcoin Trust (IBIT) quickly became the main vehicle for institutional and retail investors seeking exposure to BTC through the traditional stock market without directly holding the cryptocurrency. The Fidelity Wise Origin Bitcoin Fund (FBTC) is also among the leaders by assets and trading activity, competing with IBIT for market share.

Other notable funds include the Grayscale Bitcoin Trust ETF (GBTC), ARK 21Shares Bitcoin ETF (ARKB), Bitwise Bitcoin ETF (BITB), and VanEck Bitcoin ETF (HODL). GBTC had long been the largest public vehicle for bitcoin investment, but after converting into an ETF, it faced significant outflows due to its higher fee. Newer funds, by contrast, attract investors with lower costs, high liquidity, and backing from major asset managers.

As a reminder, Morgan Stanley launched its own bitcoin ETF in April.

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