The tides have turned for the once red-hot spot Bitcoin ETFs as a confluence of factors led to investors yanking out a staggering $671.9 million in a single day, marking the largest one-day outflow since these ETFs made their debut earlier this year. This mass exodus from the 11 U.S.-listed spot BTC exchange-traded funds came on the heels of Bitcoin’s price sliding below the psychologically significant $100,000 level, erasing the jubilant gains from earlier in the week.
The sharp reversal in fund flows snapped a formidable 15-day streak of inflows, signaling a potential shift in market sentiment. Among the hardest hit were the Fidelity FBTC ETF, which saw $208.5 million walk out the door, and Grayscale’s GBTC with outflows of $188.6 million. Even BlackRock’s IBIT, which had been on a hot streak, couldn’t escape unscathed, registering its first zero inflow in weeks.
CME Futures Premium Tells a Cautionary Tale
The derivatives market added an extra layer of intrigue to the unfolding drama. The annualized premium on CME’s one-month Bitcoin futures took a nosedive to 9.83%, its lowest point in over a month. This dip in the futures premium carries significant implications for the spot ETFs.
You see, a decline in the premium means that the once-lucrative cash-and-carry arbitrage trade, involving a long position in the ETF and a short position in the CME futures, now yields considerably less than before. This diminished profitability could further dampen demand for the ETFs in the near term.
Ether ETFs Not Immune to the Slump
The malaise wasn’t confined to just Bitcoin ETFs. Ether ETFs also felt the sting, registering net outflows of $60.5 million, breaking a monthlong inflow streak. This comes as Ether’s price has plummeted 20% from its recent highs above $4,100 in the wake of the latest Fed decision.
A Shift in the Tides or a Temporary Setback?
As the dust settles on this record-breaking outflow day, investors are left pondering whether this is a mere blip on the radar or a harbinger of a more fundamental shift in market sentiment. The resurgence of Bitcoin’s price back above $100,000 could quickly turn the tide back in favor of inflows. However, if this downtrend persists, it could signal a cooling of institutional enthusiasm for crypto ETFs.
Only time will tell if this is a temporary stumble or the start of a more prolonged cryptomarket slump. One thing is certain: all eyes will be on the Bitcoin price and those all-important ETF flows in the days and weeks ahead. As the saying goes, the night is darkest just before the dawn – but whether that dawn is on the horizon for crypto ETFs remains to be seen.
