US spot Bitcoin ETFs’ $120M daily net outflow doesn’t scare investors

The BlackRock iShares Bitcoin Trust (IBIT) experienced something new: no inflow was coming in. Since­ the start of January, IBIT has had millions of investors daily.  BlackRock received almost $15.5 billion through IBIT in just 71 days. But on April 24, the 71-day stre­ak ended as IBIT saw $0 in new inve­stments. 

Spot Bitcoin ETFs generated about $31.64 million on Wednesday. However, Thursday does not bode well for U.S. spot bitcoin ETFs. Out of the total eight funds, only Bitwise’s BITB and BlackRock’s IBIT experienced negative inflows. In total, $120.64 million was withdrawn from Wednesday alone, according to SoSoValue data.

Joe Case­lin, who is in charge of marketing for financial institutions at BIT, a cryptocurrency e­xchange, said that zero flows in an ETF is not unusual. It could me­an that excitement about ETFs is de­creasing. He hinted towards the merger of cryptocurrency and fiat currency, wherein he mentioned that it takes time for traditional finance­ to connect with cryptocurrencies. 

Additionally, he was optimistic that as conventional finance gradually integrates with cryptocurrencies, people will continue to observe new funds flow in waves. The cumulative trading volume of the eleven bitcoin ETFs has approached $230 billion. This information is extracted from The Block ETF’s dashboard. James Seyffart previously explained on X (previously Twitter) that ETF shares are generated or depleted in units. This only occurs when supply and demand are drastically different. Seyffart explains this as to why zero flows are frequent and frequently observed in ETFs.

An outflow in ETFs represents a transitory market trend. Forward-looking investors typically place greater emphasis on the fundamental characteristics of an asset and the rationale behind an ETF’s investment, rather than transient fluctuations. 

As long as the underlying funds maintain their strength, short-term outflows may not substantially diminish the ETF’s long-term prospects. Although ETF outflows may garner some interest, they are frequently regarded as an inherent component of the market cycle. They do not necessarily indicate that the ETF or the asset to which it is linked has a fundamental flaw.