Spot Bitcoin ETF Flows Sag Amid Investor Caution

GBTC outflows resumed and inflows to IBT and FBTC have slowed.

ETF.com
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Contributing Editor
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Reviewed by: etf.com Staff
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Edited by: Ron Day

After rising for a couple of days, flows to spot bitcoin exchange traded funds returned to their recent foothold in negative territory last week as investors continued to treat the risk-on asset warily. 

Flows to the 11 ETFs that started trading this year dropped into the red on three of the past four days, totaling almost $112 million, according to U.K.-based asset manager Farside Investors. The hemorrhaging stemmed largely from an exodus of assets from the largest fund by assets under management, the Grayscale Bitcoin Trust (GBTC) and dramatically reduced inflows to funds that had racked up record inflows through the first three months of their existence, BlackRock's iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Trust (FBTC)

The tepid performance followed a brief return to winning ways for the funds, which are based primarily on the ongoing price of bitcoin, the world's largest cryptocurrency by market capitalization. The ETFs generated a combined $595 million in inflows on May 3 and May 6 as bitcoin's price rallied. But markets' appetite for cryptocurrency investments has retreated markedly in recent weeks amid profit taking, regulatory concerns and macroeconomic uncertainty that has also sunk bitcoin's price.

Bitcoin was recently changing hands just over $63,000, up 3% over the past 24 hours but down 14% from its all-time high in mid-March above $73,000, according to crypto markets data provider CoinMarketCap. On April 30, it dipped below $60,000 for the first time in two months and lingered there for more than three days before recovering some lost ground. 

GBTC, which has more than $18 billion in assets under management, totaled $175 million in outflows over the last four full trading days, including $103 million on Friday. It has lost assets on all but three days of trading since converting from a trust. The fund carries the highest fee by far of 1.5%. 

IBIT and FBTC generated just $26.6 million and $12.1 million in inflows, respectively over the four days. IBIT has collected more than $15.5 billion in inflows since it started trading Jan. 11.

In a note to etf.com, Peter Eberle, president and chief investment officer of Lafayette, Calif.-based digital asset fund manager Castle Funds, wrote that investors may have grown impatient when bitcoin didn't jump following its halving in April. The halving reduced the rewards that bitcoin miners received for verifying transactions on the blockchain and was expected to boost the asset's price. 

But Eberle struck an optimistic note about bitcoin's price and subsequent demand for the ETFs later this year. 

"It’s likely we are 60k-70k rangebound until late summer/early fall," he wrote. "But I expect new highs before year end. When they do hit new ATH, it will be easy for momentum traders to get in and buy the ETF’s which could push prices aggressively."

James Rubin is a contributing editor for etf.com, where he produces the Morning Exchange and Weekly Exchange newsletters. A longtime financial writer, editor and book author, he formerly held positions as a news and markets editor for the Americas at CoinDesk, where he focussed on cryptocurrencies. 

He provided editorial guidance for a Wall Street Journal best-selling book on Bitcoin and oversaw a startup newsroom focused on digital financial assets. He has edited for TheStreet and Unchained, where he wrote daily news stories about the trial of fallen crypto entrepreneur Sam Bankman-Fried. His writing has also appeared in The Hollywood Reporter, Forbes.com, AdWeek, Bankrate, The Financial Brand and The Wall Street Journal. He has also written for Forbes Insights and the Economist Intelligence Unit, including papers presented at World Economic Forums in Davos and Mumbai. 

James is the co-author of The Urban Cyclist’s Survival Guide (Triumph Books) and has been interviewed about bike safety on a number of NPR affiliates. In a prior career, Rubin was a world-ranked tennis player, once competing in Wimbledon’s qualifying rounds. He speaks fluent German and is a graduate of the Columbia University Graduate School of Journalism and received his BA at Columbia University.