Bitcoin ETFs see net outflows for 4 straight days

Spot bitcoin ETFs have now traded in the US for 10 days.

During the last four days, this group of products has experienced net daily outflows. Still, VanEck crypto research head Matthew Sigel said the flows remain in line with the firm’s projections.

Net inflows into the funds have shrunk to $745 million, Bloomberg Intelligence data shows, as the ETFs collectively bled about $420 million in each of this week’s first four days.

The combined spot bitcoin ETF net inflow figure, since their launches on Jan. 11, goes up significantly — to more than $5.5 billion — when excluding the heavy outflows endured by Grayscale Investments’ Bitcoin Trust ETF (GBTC).

Read more: Bitcoin ETF Tracker

Nearly $4.8 billion has left the Grayscale fund since its conversion to an ETF. The sales come after investors in recent years had no way to sell shares of the fund without doing so on the secondary market at a substantial discount. GBTC also carries a 1.5% fee — a price point significantly higher than the nine offerings it competes with.

GBTC’s roughly $12 billion in trade volumes since Jan. 11 account for more than half of the $22.7 billion the 10 spot bitcoin ETFs have seen combined.

The net inflows seen by spot bitcoin funds from leaders BlackRock and Fidelity have not overcome the GBTC outflows of late. BlackRock’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) on Thursday saw $171 million and $101 million of net inflows, respectively. GBTC’s spillage amounted to $394 million that day.

Thursday net outflows for spot bitcoin ETFs was $80 million on Thursday — down from $158 million the day before, according to Bloomberg Intelligence. Net outflows for the segment totaled $76 million on Monday and $106 million on Tuesday.

But VanEck’s Sigel said the spot bitcoin ETFs’ aggregate flows are tracking in line with the firm’s expectations.

Sigel wrote in December that he expected spot bitcoin ETFs to see $2.4 billion of net flows during the first quarter of 2024. The VanEck Bitcoin Trust (HODL) had $115 million in assets under management on Thursday, according to the firm’s website.

“Retail has dominated our early flows, a dynamic we expect to subside as larger banks and brokers release asset allocation models that include bitcoin,” Sigel told Blockworks Friday. “This should enable financial advisers to put [bitcoin] ETFs in discretionary accounts.”

VanEck’s estimate of the funds hitting roughly $40 billion of net inflows in the first two years of trading “is informed by the historical performance of the first gold ETF, adjusted for changes in money supply and bitcoin’s market share gains versus gold,” Sigel noted.

Despite GBTC putting a dent into the group’s net inflow total, Neena Mishra, director of ETF research at Zacks Investment Research, said her expectation that these products would represent one of the most “successful” ETF launches ever has borne out.

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“Huge inflows into BlackRock and Fidelity products are not unexpected, given their stature as powerhouses in the asset management industry,” she said. “Advisers, in particular, are very comfortable investing in their products, [and] Fidelity has established itself as a pioneer in some aspects of this field.”

Investors cashing out of GBTC was also expected given its elevated fee compared to rival funds, Mishra noted. The number of investors holding the fund in taxable accounts and the potential capital gains implications for them remains unknown, she added.

“Therefore, it is difficult to predict the outflows in the next weeks and months,” Mishra said. “Inflows into the new products will also depend on bitcoin’s performance now.”

Bitcoin (BTC) had risen to about $41,800 at 11:30 am ET — up about 5% from 24 hours prior.

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