BTC ETFs lose $635 million in a single day. What next?
Bitcoin’s Momentum Falters as ETF Outflows Increase
Bitcoin’s recent surge past $80,000 seems to be losing steam as the 11 U.S.-listed spot bitcoin exchange-traded funds (ETFs) experience significant outflows. After attracting $3.29 billion in investor funds throughout March and April, these ETFs are now seeing a reversal in fortunes.
On Wednesday, investors withdrew a staggering $635 million from these funds, marking the highest single-day net outflow since January 29, according to data from SoSoValue. Over the past five trading days, these ETFs have collectively lost $1.26 billion, reducing total net inflows from $59.76 billion to $58.5 billion since their launch in January 2024.
Despite the positive inflows being viewed as bullish catalysts, Bitcoin’s rally has come to a halt. The cryptocurrency’s price, which rose from $65,000 to over $80,000, has stalled near the 200-day simple moving average above $82,000. In the last 24 hours, Bitcoin has dropped over 2% to $79,400, with some attributing this decline to resurging inflation concerns in the U.S., even as traditional markets like the Nasdaq and S&P 500 hit new highs.
Adam Haeems, head of asset management at Tesseract Group, remarked, “A persistently hot CPI, an incoming Fed under Warsh that markets read as more hawkish, or another oil shock can compress bitcoin even with positive net flows. From our perspective, the more useful question is not whether the markup leg continues, but whether macro conditions stay loose enough for the flows to do their work.”
While there is a correlation between ETF flows and Bitcoin’s price movements, recent data suggests a weakening relationship. The 90-day rolling Pearson coefficient between Bitcoin’s daily returns and ETF inflows has dropped to 0.16, almost zero, from a peak of 0.68 in February. This indicates that ETF flows may no longer provide reliable signals for Bitcoin’s price direction.
However, despite this reduced correlation, large outflows like the one witnessed on Wednesday still hold significance in the market. Investors will be closely monitoring future ETF movements to gauge Bitcoin’s next moves.
