Interrupted the series of outflows from Bitcoin ETFs

Yesterday, the series of days with outflows of capital from Bitcoin ETFs was interrupted. 

After five consecutive sessions of decline, the positive sign has returned. 

The outflows from Bitcoin ETFs

Starting from Monday, March 18, there have been five consecutive stock market sessions with capital outflows from the Bitcoin ETFs.

This is the overall balance of all inflows or outflows on all Bitcoin ETFs. 

In fact, the largest ETF, GBTC by Grayscale, has experienced outflows since the first day of trading on January 11, and since then practically every day capital has been withdrawn. 

Just think that from the approximately 620,000 BTC that the fund held on January 10th, they have now dropped to less than 350,000, so just over half. Furthermore, these outflows could continue, because GBTC now suffers from direct competition on the stock exchange from other ETFs that, however, have much lower commission costs. 

It is worth noting, however, that the other two main Bitcoin ETFs, BlackRock’s IBIT and Fidelity’s FBTC, have never experienced net outflows of capital since day one.

What makes the difference is not the trend, always negative for GBTC and always positive for the other two, but the magnitude of the daily movements. 

Adding up all the inflows and outflows, it emerges that after the first two positive days, Thursday 11 and Friday 12 January, there were then a couple of weeks of overall outflows, causing the price of BTC to drop below $40,000. 

The inflows

Starting from the end of January, however, overall inflows returned to positive, mainly thanks to a strong reduction in outflows from GBTC. 

Indeed, excluding the first day, until January 2nd included, more than 400 million dollars per day were flowing out of Grayscale’s ETF. 

But starting from January 25th, the daily outflows from GBTC dropped below 400 million, and then on February 6th they even dropped below 100 million. 

Meanwhile, the average daily inflows on IBIT and FBTC were not increasing, so it is only thanks to the reduction of outflows from GBTC that the January trend has reversed. 

This series of inflows continued until Friday, March 15, bringing the price of Bitcoin to new all-time highs of over $73,800 the day before.

The strong correction of money outflows from spot Bitcoin ETFs

However, last Monday the situation changed again, with daily outflows from GBTC back above 300 million dollars, peaking at -642 million on the same Monday. 

At the same time, IBIT and FBTC were struggling to absorb more than 100 million dollars a day with new inflows, so the overall trend had turned negative. 

However, this situation seems to have only lasted for a week, during which the price of BTC experienced a temporary correction with negative peaks falling below $61,000. 

It should be noted, however, that the first day in 2024 when the price of Bitcoin returned above $60,000 was February 28th, so the decline of last week did not interrupt the medium-term growth trend, but only brought the price back to the levels of three weeks before. 

Such correction has also proved to be only temporary, although now that it is over, it is by no means certain that a new rally will be triggered. 

The new capital inflows

Yesterday the capital outflows from GBTC were still significant, above 350 million dollars, but they were all absorbed by the inflows of other ETFs, which turned out to be 15 million dollars higher. 

It should be emphasized, however, that a single positive daily data point cannot be taken as a definite indication of a trend reversal, but if, for example, outflows from GBTC were to significantly decrease today, confirmation could begin to be obtained. 

By the way, yesterday IBIT from BlackRock absorbed only 35 million dollars, while it was FBTC from Fidelity that dominated with almost 262 million. 

As of today IBIT has reached 243,000 BTC, while FTBC is at 136,000. Therefore BlackRock’s ETF still dominates the ranking of GBTC challengers, with almost twice the amount of Bitcoin of the third ETF in the ranking. 

Today will be a very important day from this point of view, because it will be understood if the trend has really reversed, or if yesterday was just a temporary interruption. 

Note that March 31st marks the end of the first quarter of 2024, and this seems to be able to help new capital inflows into Bitcoin ETFs. 

Furthermore, the April halving is getting closer and closer, as it is expected to occur around the 20th of the month, and it is possible that the event will have the power to attract new capital to Bitcoin at least until around the day of the event.