Spot Bitcoin ETFs See Record Outflows

Spot Bitcoin exchange-traded funds (ETFs) reached a daily record high of over $1.1 billion in combined outflows on Tuesday. This drop comes as the price of Bitcoin, the largest cryptocurrency by market value, fell during a broader market downturn.

The recent decline followed Monday’s outflows of $539 million, marking the sixth-highest total in the nearly 14-month history of these funds, according to UK asset manager Farside Investors.

“We had a record outflow yesterday across the U.S. spot Bitcoin ETFs,” Bloomberg ETF Research Analyst James Seyffart commented to Decrypt. “However, this scenario is relatively typical for a volatile ETF category. Generally, ETFs tend to grow in a series of steps forward followed by backtracking.”

Seyffart emphasized that despite the significant outflows, these ETFs still hold over $100 billion in assets. “Although outflow figures appear substantial, they’re merely around 2.3% of total assets, which isn’t overly alarming. The timing of this trend remains uncertain.”

According to Seyffart, numerous factors contributed to these outflows, including the recent Bybit hack and broader sell-offs in risk assets due to potential macroeconomic slowdowns. He hypothesized that unwinding basis trades is a critical reason for the ETF outflows, explaining that these ETFs are frequently used to mitigate short positions in futures.

Throughout February, the 11 Bitcoin ETFs have lost over $2 billion as investors, anxious about inflation, potential trade wars from Trump tariffs, and global conflicts, moved away from crypto and other riskier investments. The $1.4 billion Bybit hack last Friday has further unsettled the market.

Spot Bitcoin funds have attracted approximately $40 billion in net inflows, marking them as some of the fastest-growing ETFs in the history of the industry.

In a communication with Decrypt, ETF.com Analyst Sumit Roy noted that the tech-focused Invesco QQQ Trust (QQQ), which manages more than $328 billion in assets, experienced a decline for the past four consecutive days, with the Nasdaq and S&P 500 indexes dropping 3.8% and 2.1%, respectively, over the last five days.

Yet Roy highlighted that despite the recent market turmoil, flows for U.S.-listed crypto ETFs are still in positive territory this year, amounting to $3.1 billion.

As of Wednesday, Bitcoin fell below $84,000 for the first time since November, reflecting a 12% weekly decline to a price of $84,032. Other major coins, such as Ethereum, XRP, and Solana, have also seen their values drop significantly over the past week.

ETFs tracking the spot price of Ethereum experienced a loss of approximately $130 million this week—the highest two-day total since early January.

This downturn occurs even as several asset managers have submitted applications to the U.S. Securities and Exchange Commission for new funds based on the performance of cryptocurrencies like XRP, Litecoin, Cardano, Polkadot, and Solana to cater to the growing demand for crypto-focused investments.

In an email Wednesday, Geoffrey Kendrick, the global head of digital assets research at Standard Chartered, expressed caution regarding the crypto market, adjusting his earlier optimistic view about buying the dip when ETF outflows reached $1.1 billion. “While that level of outflows is reassuring, I believe the selloff isn’t over,” Kendrick stated, having predicted Bitcoin would drop to the low $80,000 range, which it appears to be approaching as of that afternoon.

Edited by Andrew Hayward