Investor Interest in Bitcoin ETFs Declines with $80 Million Net Outflow
Investor interest in newly launched spot Bitcoin ETFs seems to be diminishing, as another $80 million net outflow was recorded. On Wednesday, Bitcoin ETFs saw an inflow of approximately $270 million, but when factoring in withdrawals from Grayscale Investment’s Bitcoin ETF, the net outflows totaled about $153 million. This trend continued with a $80 million net outflow today, making it the fourth consecutive day of net withdrawals across these 10 funds.
Outflows Solely from Grayscale Bitcoin Trust (GBTC)
The net outflows were solely from the Grayscale Bitcoin Trust (GBTC), which transitioned into an ETF following approval from the U.S. Securities and Exchange Commission. Since becoming an ETF on January 11, GBTC has experienced approximately $4.8 billion in withdrawals. During this period, the value of Bitcoin decreased by about 20%. The conversion of GBTC from a closed-end trust to an ETF format allowed investors to exit a previously popular arbitrage opportunity, leading to significant sell-offs.
Sell-Offs Fueled by Bankrupt FTX Exchange’s Estate
The sell-offs were partly fueled by the liquidation activities of the bankrupt FTX exchange’s estate. The highest daily outflow from this fund was recorded at $641 million on January 22, but it reduced to $394 million by January 25.
Hot Take: Investor Interest in Bitcoin ETFs Dwindles
Despite initially seeing inflows, newly launched spot Bitcoin ETFs are experiencing net outflows as investor interest wanes. The transition of Grayscale Bitcoin Trust into an ETF opened up opportunities for investors to exit positions, resulting in significant sell-offs. The bankrupt FTX exchange’s estate also contributed to the sell-offs. These developments highlight the volatility and changing dynamics of the cryptocurrency market, emphasizing the importance of closely monitoring and assessing investment opportunities in this space.
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