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itcoin ETF Capital Exodus Surges to $563 Million in Record Outflow

itcoin ETF Capital Exodus Surges to $563 Million in Record Outflow

Markets

Jack Evans

May 2, 2024 at 08:56 pm

On May 1, the U.S. spot Bitcoin ETF sector experienced a historic capital exodus, totaling a staggering $563.77 million in outflows. This marks the sixth consecutive day of fund drainage, setting a new record since the inception of spot Bitcoin ETFs authorized by the U.S. SEC.

Ten products within the sector witnessed significant capital outflows, with the Fidelity Wise Origin Bitcoin Fund (FBTC) bearing the brunt with a withdrawal of $191.09 million. Notably, May 1 also marked the first instance of capital outflow from the iShares Bitcoin Trust (IBIT), managed by BlackRock, following a streak of 70 consecutive days of net inflows.

Nate Geraci, the head of The ETF Store, drew parallels between IBIT's performance and that of the iShares Gold ETF from BlackRock, highlighting the latter's loss of over $1 billion within a year.

So, iShares Bitcoin ETF has first day of outflows ($37mil)…

Has taken in $15+bil ytd.

For perspective, iShares Gold ETF has $1bil *outflows* this yr.

SPDR Gold ETF has $3bil outflows.

And gold is up 16% ytd.

This is what ETFs do. Inflows don’t go up in straight line.
— Nate Geraci (@NateGeraci) May 2, 2024

This perspective found support from Bloomberg Intelligence analyst James Seyffart, who underscored the stability of ETF operations despite such fluctuations, emphasizing that inflows and outflows are inherent aspects of ETF dynamics.

The net capital outflow on May 1 surpassed the entire outflow for April, which amounted to $345.88 million. This monumental shift occurred concurrently with Bitcoin's price dipping below $57,000, prompted by market reactions to news of a four-month prison sentence for Binance founder Changpeng Zhao.

The record outflow from Bitcoin ETFs underscores the volatility inherent in cryptocurrency markets, as investors navigate through fluctuating prices and regulatory uncertainties. Despite these challenges, industry experts remain optimistic about the resilience and long-term potential of Bitcoin and ETFs as viable investment instruments.