By
Mayowa Adebajo
May 10th, 2024
Despite the slowdown in net inflows, Bitcoin ETFs have demonstrated resilience, with total net inflows reaching $1.56 billion.
Recent data from Farside Investors reveals that the iShares Bitcoin Trust (IBIT) from BlackRock Inc (NYSE: BLK) witnessed its smallest net inflow since inception, with a mere $45 million flowing into the Bitcoin ETF, bringing its total net inflow to a commendable $3.2 billion.
Bitcoin ETF Inflow Seeing Potential Slowdown
While this figure still reflects substantial investor interest, it signals a potential slowdown in momentum compared to the explosive gains witnessed in the days following IBIT’s launch.
The approval of IBIT’s registration statement by the Securities and Exchange Commission (SEC) was a remarkable moment for the crypto space, providing investors with a regulated avenue to access Bitcoin through an Exchange-Traded Fund (ETF). The anticipation surrounding its launch translated into notable gains shortly after trading commenced, with IBIT experiencing robust inflows.
Data from SoSoValue highlights the enthusiasm surrounding Bitcoin ETFs, with the total net inflow of spot Bitcoin ETFs reaching $33.74 million on Tuesday, marking the eighth consecutive day of net inflow. In contrast, the Grayscale Bitcoin Trust (GBTC) registered another day of outflows, albeit with a diminishing volume of $72.72 million, the lowest recorded in any trading day. Except for Grayscale Investments, the other nine ETFs approved in January experienced a net inflow of US$106 million.
Farside Investors data indicates ongoing outflows from GBTC, amounting to an estimated $6.15 billion. Reports indicate that the defunct crypto exchange FTX played a role in the outflows from GBTC. FTX’s bankruptcy estate liquidated its GBTC holdings, selling 22 million shares for approximately $1 billion.
The substantial outflows from GBTC dampened market sentiment and contributed to a decline in Bitcoin’s price, which briefly fell below $40,000. However, at the time of writing, BTC is trading at $43,075, demonstrating a 0.50% increase in the past 24 hours, with market capitalization pegged at $845 billion.
BTC ETF Resilience amid Challenges
Despite the slowdown in net inflows, Bitcoin ETFs have demonstrated resilience, with total net inflows reaching $1.56 billion, according to Farside Investors. However, the dynamics of the ETF ecosystem will warrant close observation if these trends persist.
In terms of trading volumes, competition among spot Bitcoin ETFs remains healthy, with Fidelity Investments and BlackRock leading the pack. However, Grayscale Investments recently recorded higher trading volume than both, indicating a potential shift in market dynamics. On some days, these three entities have accounted for about 90% of trading activity in spot Bitcoin ETFs.
In conclusion, the recent trends in net inflows and trading volumes highlight the growing maturity of the crypto market and the increasing institutional interest in digital assets. Moving forward, monitoring the trajectory of Bitcoin ETFs will provide valuable insights into the dynamics of crypto investment and its integration into traditional financial markets.