spot bitcoin ETFs experienced their worst week since January

For the first time in their young history, spot bitcoin ETFs recorded negative total flows over 5 consecutive days last week.

Is the spot bitcoin ETF market running out of steam? For the first time, the funds at the head of these financial products recorded negative total flows, to the tune of $888 million, over 5 consecutive days last week. This poor performance explains, in part, the fall in the price of bitcoin last week towards $60,000.

On January 10, the American stock market watchdog (the SEC) has authorized 11 spot bitcoin ETFs, offered in particular by asset managers like Blackrock and Fidelity. An ETF (or Exchange Traded Funds) is an index fund trading on a stock exchange which follows the evolution of a stock index (or one or more financial or physical assets, such as gold) by replicating the increase as well as the drop in the price of this index (or these assets).

In detail, 9 spot bitcoin ETFs achieved their worst performance last week (with very low inflows) while the Grayscale fund experienced a descent into hell which unbalanced total flows. The IBIT, the ETF of the giant Blackrock, for its part recorded on Friday its lowest inflow of capital since its launch, with only $18.9 million in inflows. Similarly, Fidelity’s FBTC fund had its worst day on Thursday, with $2.9 million in inflows.

Worst day for Grayscale

Grayscale’s GBTC fund had its worst day on Monday March 18, with 642.5 million outflows. Over one week, the fund faced more than $1.84 billion in capital outflows.

As a reminder, this fund was converted into an ETF at the beginning of January 2024. Its bitcoin reserves have since dwindled, going from 550,000 bitcoins held at its highest to 350,000 bitcoins to date. According to the analysis company Arkham Intelligence, the fund could see its bitcoin reserve empty within 100 days if more than 25,000 bitcoins continue to leave it each week.

Unlike other spot bitcoin ETFs, Grayscale charges high fees, incentivizing investors to recoup their profits by selling their shares. Last week’s big outflows can be explained by massive sales by crypto company Genesis.

The media outlet The Block recalls that the cumulative transaction volumes on the 11 bitcoin spot ETFs have reached, since their launch, 164 billion dollars (i.e. approximately 2.3 billion dollars traded each day on average on these ETFs between January 11 and March 22). It will be interesting to observe this week’s dynamics in the spot bitcoin ETF market, to see if a negative trend sets in or not.