Bad Week for Bitcoin ETFs: Spot Bitcoin ETFs Experience Largest Daily Outflow Since Launch

TLDR

• Spot Bitcoin ETFs experienced record outflows of over $1.1 billion on Tuesday, with over $2.4 billion exiting this week
• Bitcoin price has fallen to around $84,000, down 17% since late January
• Markets are reacting to Trump administration tariffs, inflation concerns, and the $1.4 billion Bybit exchange hack
• Despite recent losses, Bitcoin ETFs still manage over $90 billion in assets
• Analysts suggest this is part of a broader market risk-off shift but remain optimistic about crypto’s long-term outlook

Bitcoin exchange-traded funds (ETFs) are experiencing their worst week on record. The funds have shed more than $2.4 billion in assets this week alone. This marks a sharp reversal from their growth since launching 14 months ago.

Tuesday set a new daily outflow record. Investors pulled over $1.1 billion from spot Bitcoin ETFs in a single day. This was followed by another $759 million in outflows on Wednesday.

The sell-off comes as Bitcoin’s price has fallen below $84,000. This represents a 17% drop since late January. The cryptocurrency is now trading at levels not seen since November 2024.

Several factors are driving this market downturn. The new Trump administration’s tariff policies have raised fears of a potential trade war. This has pushed investors away from riskier assets like cryptocurrencies.

Economic indicators are also causing concern. Spikes in inflation and declining consumer confidence have contributed to market anxiety. Last Friday, the University of Michigan lowered its consumer sentiment index to its lowest level since November 2023.

ByBit Hack

The crypto world was further rattled by a major security breach. A $1.4 billion hack of the Bybit exchange last Friday has unsettled investors. This represents the largest hack of its kind in crypto history.

Ethereum has been hit even harder than Bitcoin. The second-largest cryptocurrency has fallen more precipitously over the past month. It is now trading at three-month lows.

Despite these setbacks, the 11 spot Bitcoin ETFs still manage over $90 billion in assets. This shows the staying power of these investment vehicles despite market volatility.

Spot Ethereum ETFs are also feeling the pressure. These funds, which received SEC approval in July, have seen $222.4 million in outflows this week. They currently manage over $8 billion in assets.

Market Analysts

Market analysts offer different perspectives on these movements. Some suggest that retail investors are selling to lock in gains from the recent bull market. They may be anticipating further market declines.

Other analysts point to institutional investors. Large funds may be engaging in basis trading strategies. This involves profiting from price differences between spot and futures markets.

James Butterfill of CoinShares puts the outflows in perspective. He told Fortune that $1 billion represents only a small fraction of the total $100 billion invested in Bitcoin ETFs. “It’s actually quite small in the grand scheme of things,” he said.

Noelle Acheson, a markets analyst, sees the decline as part of a broader trend. She described it as “part of the risk-off shift, with growth concerns hitting almost all liquid markets.” However, she remains optimistic about crypto’s future.

Acheson believes lower price levels may attract new investors. She points to positive regulatory developments and increasing institutional interest in crypto services. These factors could support the market in coming months.

The crypto industry continues to expand despite the current downturn. Asset managers have filed applications with the SEC for new funds based on other cryptocurrencies. These include XRP, Litecoin, Cardano, Polkadot, and Solana.

This market correction follows a period of strong growth for Bitcoin. The cryptocurrency reached an all-time high above $100,000 earlier this year before beginning its recent decline.