Record $1 Billion Outflows From US Spot Bitcoin ETFs

US spot bitcoin ETFs have seen daily net inflows of $1 billion, marking the largest single-day outflow ever. Notably, this figure does not include data from Ark Invest’s ARKB fund, which has seen more than $2 billion exit its ETF products in a six-day streak of negative flows.

Of the 12 spot bitcoin ETFs, 10 reported net outflows, with Fidelity’s FBTC leading the way with $344.65 million in outflows on Tuesday. BlackRock’s IBIT fund saw $164.3 million in outflows, according to data from SoSoValue. Several other funds also saw significant outflows, including Valkyrie’s BRRR with $100 million in outflows, Bitwise’s BITB with $88.3 million, and Grayscale’s Mini Bitcoin Trust with $85 million.

This record net inflow surpassed the previous high of $671.9 million on December 19, after the bitcoin price corrected from a peak near $108,000. Since the beginning of the week, outflows from spot bitcoin ETFs have surpassed $2 billion, reflecting market sentiment.

Market downturn, factors affecting inflows

The broader market downturn coincided with Bitcoin’s decline to a yearly low of around $88,000. Other cryptocurrencies such as Ether, XRP, and Solana also saw sharp declines. Peter Chung, head of research at Presto Research, said Bitcoin's drop below $90,000 was part of a broader risk-off trend driven by weak Nasdaq futures, a strong yen and steady 10-year Treasury yields.

Chung said traditional hedge funds have been taking advantage of basis trading by buying Bitcoin ETFs and shorting CME futures to profit from the yield differential. However, as this strategy has become less profitable, many funds have begun unwinding their positions, contributing to significant outflows.

Crypto analyst Rachael Lucas of BTC Markets also pointed out that institutional investors have been rebalancing their positions following Bitcoin’s strong performance in 2024. Lucas explained that after a significant recovery, it is understandable that investors are taking profits, especially as the market enters the new year with a slower growth rate.

Long-term outlook remains positive

While the current outflows are putting pressure on Bitcoin prices, Lucas emphasized that the long-term supply-demand dynamics remain strong, especially as the April 2024 halving event approaches. The reduction in new BTC issuance after the halving typically provides a boost to Bitcoin prices, as seen in previous cycles.

Lucas warned that if the outflows continue, it could increase volatility in the market. However, a combination of spot demand, on-chain activity, derivatives positioning, and macro factors will continue to shape Bitcoin’s direction in the near term.

As of press time, the total net asset value of US-based spot bitcoin ETFs stood at $101.4 billion, according to data from SoSoValue. Meanwhile, spot ether ETFs also saw $50 million in outflows, with Grayscale’s ETHE leading the way with over $27 million.