U.S. Bitcoin, Ether ETFs Lose Nearly $1 Billion in One Day
In a dramatic turn of events, U.S.-listed spot Bitcoin and Ether exchange-traded funds (ETFs) faced significant redemptions on Thursday. Nearly $1 billion was withdrawn in a single day as cryptocurrency prices plummeted, reflecting a waning risk appetite among investors.
Significant Outflows from Bitcoin and Ether ETFs
According to data from SoSoValue, the total outflow for U.S. spot Bitcoin ETFs reached $817.9 million on January 29, marking the largest daily withdrawal since November 20. Additionally, Ether ETFs experienced a loss of $155.6 million, illustrating a broader trend of declining interest.
Impact of Falling Crypto Prices
The outflows coincided with a notable decrease in cryptocurrency values. Bitcoin fell below $85,000 and subsequently dropped toward $81,000 during U.S. trading hours. As of Friday morning in Asia, it hovered around $83,000. Ether also experienced a setback, declining by more than 7% on the same day.
Leading ETF Redemptions
- BlackRock’s IBIT suffered the most, with redemptions totaling $317.8 million.
- Fidelity’s FBTC saw a withdrawal of $168 million.
- Grayscale’s GBTC recorded an outflow of $119.4 million.
Other smaller products, including those managed by Bitwise, Ark 21Shares, and VanEck, were not immune to the crisis.
Decline in Ether ETF Assets
Ether ETFs followed a similar trajectory. BlackRock’s ETHA lost $54.9 million, and Fidelity’s FETH faced $59.2 million in withdrawals. Grayscale’s Ether products continued to experience asset bleed, resulting in total Ether ETF assets declining to $16.75 billion from over $18 billion earlier this month.
Shift in Institutional Investor Behavior
The widespread selling reflected a trend where institutional investors reduced their overall exposure to cryptocurrencies rather than simply rotating between different assets. Earlier in January, inflows into Ether funds had offset some weaknesses in Bitcoin products. However, the current scenario illustrates a marked shift.
Factors Driving Market Sentiment
The selloff aligns with rising volatility across risk assets and growing uncertainty regarding U.S. economic policy. Analysts have labeled potential Federal Reserve nominee Kevin Warsh as bearish for Bitcoin. Factors such as increased implied volatility, weak equities, and speculation about future U.S. Federal Reserve leadership have further dampened market sentiment.
Future Outlook for ETFs
The current situation indicates that ETF flows are reacting to price movements rather than driving them. As long as both Bitcoin and Ether remain under pressure, it is expected that demand for ETFs will stay weak. Investors seem poised to wait for market stability before re-entering.
Andri Fauzan Adziima, Research Lead at Bitrue, commented, “Bitcoin crashed to $81k due to a risk-off wave. This was driven by a hawkish Fed, heavy spot BTC ETF outflows exceeding $1 billion, and tensions from international trade and geopolitical issues.” He added that the aggressive liquidation of leveraged positions contributed to the pressure on spot prices.
