Bitcoin
Spot Bitcoin ETF Flows Drop Amid Investor Caution
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After rising for a few days, flows into bitcoin exchange-traded funds returned to their recent position in negative territory last week as investors continued to treat the risky asset with caution.
Flows into the 11 ETFs that began trading this year have fallen into the red on three of the past four days, totaling nearly $112 million, according to U.K.-based asset manager Farside Investors. The haemorrhage largely resulted from an exodus of assets from the largest fund by assets under management, the Grayscale Bitcoin Trust (GBTC) and drastically reduced inflows to funds that accumulated record inflows during the first three months of their existence, BlackRock’s iShares Bitcoin Trust (IBIT) and the Fidelity Bitcoin Trust (FBTC).
The tepid performance followed a brief return to winning ways for the funds, which are largely based on the continued price of bitcoin, the world’s largest cryptocurrency by market capitalization. The ETFs generated combined inflows of $595 million on May 3 and 6 as the price of bitcoin rose. But markets’ appetite for investing in cryptocurrencies has declined sharply in recent weeks, amid profit-taking, regulatory concerns and macroeconomic uncertainty that have also tanked the price of bitcoin.
Bitcoin was recently changing hands at just over $63,000, up 3% in the last 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 fell below $60,000 for the first time in two months and remained there for more than three days before regaining some lost ground.
GBTC, which has more than $18 billion in assets under management, has totaled $175 million in outflows over the last four full trading sessions, including $103 million on Friday. He has lost assets on all but three trading days since converting a trust. The fund charges the highest fee, by far 1.5%.
IBIT and FBTC generated just $26.6 million and $12.1 million in inflows, respectively, over the four days. IBIT has raised more than $15.5 billion in inflows since it began trading on January 11.
In a note to etf.com, Peter Eberle, president and chief investment officer of Castle Funds, a Lafayette, Calif.-based digital asset fund manager, wrote that investors may have become impatient when bitcoin failed to bounce following its decline by half in April. The halving reduced the rewards bitcoin miners received for verifying transactions on the blockchain and was expected to increase the price of the asset.
But Eberle struck an optimistic note about the price of bitcoin and subsequent demand for ETFs later this year.
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“We are likely to be in the 60k-70k range by late summer/early fall,” he wrote. “But I expect new highs before the end of the year. Once they hit the new ATH, it will be easy for momentum traders to jump in and buy the ETFs, which could push prices aggressively.”
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