The once-celebrated inflow streak of US Spot Bitcoin Exchange-Traded Funds (ETFs) abruptly halted this week. After Bitcoin’s sharp price drop, BlackRock’s Bitcoin ETF (IBIT) and Fidelity’s FBTC saw record-breaking outflows, hinting at declining institutional confidence. This marks a sharp turn from months of bullish growth driven by Bitcoin’s rally and hopes for a US Bitcoin Strategic Reserve.
A Sudden Shift in Bitcoin ETF Dynamics
US Spot Bitcoin ETFs were on a winning streak for over two weeks, raking in steady inflows that symbolized growing confidence in the world’s largest crypto. On December 18, this streak ended.
On December 19, 2024, U.S. spot Bitcoin ETFs recorded a staggering net outflow of approximately $671.9 million. This marked the largest single-day withdrawal since their inception earlier this year.
This trend continued the following day, with an additional outflow of around $277 million. Fidelity’s FBTC led the withdrawals, experiencing an outflow of $208.6 million, followed by Grayscale’s Bitcoin Mini Trust with $188.6 million.
BlackRock’s IBIT ETF recorded its largest single-day outflow of $72.7 million, and Ark Invest’s ARKB was no exception. The correlation between Bitcoin’s price and ETF flows shows that institutional investors reevaluate their investments due to economic factors.
The end of a 16-day inflow streak highlights the impact of these changes. It also shows how sensitive the crypto market is to broader economic shifts.
Market Volatility and Investor Sentiment
These notable outflows happened alongside a drop in Bitcoin’s price below $100,000, triggered by the Federal Reserve’s cautious policy stance. This shift affected investor confidence in riskier assets like cryptocurrencies.
Despite the short-term volatility, Bitcoin remains a focal point for institutional and corporate players. Companies like MicroStrategy continue to expand their BTC holdings. At the same time, miners such as Marathon Holdings and Hut 8 have doubled down on their accumulation strategies.
Reportedly, investors in Bitcoin have refused to sell their coins despite the sharp price decline. This shows resilience amid the market’s current challenges.
Additionally, Bitcoin is gaining attention globally, with Europe, Russia, and Japan considering a Bitcoin reserve similar to that of the US. Despite short-term market fluctuations testing investor confidence, these moves highlight Bitcoin’s growing importance as a strategic asset.
A Temporary Setback or a New Trend?
According to market analysts, Bitcoin’s long-term outlook remains robust despite the turbulence. Analysts think the current pullback is a temporary setback caused by short-term recent market conditions.
Bitcoin’s resilience is clear as it rebounded 6.11% to $98,232 after dropping to $92,175 in the last 24 hours, per CoinMarketCap data. However, CoinGlass data shows that Bitcoin Futures’ open interest remains low, indicating caution among investors.
