US Spot Bitcoin ETFs Face $300 Million Outflow, Ending Positive Trend

Significant Outflows Challenge US-Based Spot Bitcoin ETF Performance

In the most recent trading week, US-based spot Bitcoin exchange-traded funds (ETFs) encountered substantial challenges, resulting in over $300 million in outflows and reversing the previous three weeks of positive inflows. While a slight inflow was observed on Friday, it was insufficient to counterbalance the considerable outflows recorded earlier in the week.

Weekly Performance and Inflows

On Friday, spot Bitcoin ETFs experienced a modest daily inflow of $25.6 million. This uptick was mainly driven by Bitwise’s BITB fund, which attracted $15.3 million. Following closely was Fidelity’s FBTC, bringing in $13.6 million, while VanEck’s HODL and Ark & 21Shares’ ARKB each contributed $5.29 million. Despite this contribution, the net outflows led to a decline in the total net assets held by these funds, dropping from $61.21 billion on September 27 to $57.73 billion by the end of the week.

Decline in Bitcoin Price Affects Investor Sentiment

The significant outflows coincided with a drop in Bitcoin’s price, which slid from approximately $65,000 on September 27 to around $62,000 by October 4. This decline in value has severely impacted investor sentiment, contributing to the outflow trend observed in the Bitcoin ETFs.

Ethereum ETFs Also Experience Net Outflows

In a parallel development, US-based Ethereum ETFs saw a modest daily inflow of $7.4 million on Friday. However, the overall trend for the week resulted in a net negative outflow of $30.7 million. The inflows were primarily led by BlackRock’s ETHA fund, which recorded $14.7 million, along with Bitwise’s ETHW that attracted $871,000. These inflows were unfortunately offset by $8.2 million in outflows from Grayscale’s ETHE fund, coinciding with a drop in ether’s price from about $2,700 on September 27 to approximately $2,400 on October 4.

Despite crossing $1 billion in net asset value for the first time last week, BlackRock’s spot Ethereum fund has since declined below that threshold, currently holding assets worth $987.6 million, as per SoSoValue data.

Bitwise’s Strategic Revamp to Combat Volatility

In response to the ongoing volatility in the crypto market, Bitwise has announced a strategic revamp of its three crypto futures exchange-traded funds by incorporating Treasuries. Matt Hougan, the Chief Information Officer of Bitwise, stated that "the goal is to help minimize downside volatility and potentially improve risk-adjusted returns." This shift aims to stabilize performance amid ongoing market fluctuations.

Conclusion: Ongoing Challenges for Bitcoin and Ethereum ETFs

As the cryptocurrency market continues to navigate fluctuations in price and investor sentiment, these recent developments underscore the ongoing challenges faced by Bitcoin and Ethereum ETFs in attracting and retaining capital. Investors are advised to stay informed and adapt to the changing landscape as they make decisions regarding their cryptocurrency investments.