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Bitcoin Spot ETFs Register Five-Day Withdrawals Streak Ahead of Halving

  • The U.S. spot ETFs lost $4.3 million in outflows on Thursday, taking the five-day tally to over $319 million.

  • GBTC again led the outflows, while inflows into BlackRock's IBIT continued to slow.

The U.S.-based spot bitcoin {{BTC}} exchange-traded funds (ETFs) registered cumulative outflows of $4.3 million on Thursday, extending the four-day run of withdrawals ahead of the supposedly bullish mining reward halving.

Since April 12, the ETFs have witnessed a total net outflow of over $319 million, with Grayscale's GBTC accounting for a large share of the withdrawals, provisional data published by Farside Investors showed.

For instance, on Thursday, GBTC alone saw a significant loss of $90 million in outflows, which was partially offset by inflows into Fidelity's FBTC and BlackRock's IBIT.

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The Grayscale ETF has been losing money since day one for several reasons, including the fund's relatively costly fee structure. So, GBTC outflows may not be a cause for concern, but the recent slower inflows into other ETFs might be.

BlackRock's IBIT attracted just $18.8 million on Thursday, down 93% from the monthly high of $308.8 million on April 5.

"Key liquidity drivers, such as stablecoin growth and US-listed Bitcoin ETF inflows, have slowed down - as we have mentioned for several weeks. ETF flows peaked on March 12, and four consecutive days of net outflows have recently been seen. Demand for US-listed Bitcoin ETFs appears saturated, as even a 10-15% decline in Bitcoin prices has not increased net inflows," Matrixport said in a market update early Friday.

Bitcoin ETF flow table. (Farside)
Bitcoin ETF flow table. (Farside)

Bitcoin changed hands at $64,700 at press time, down over 13% from the record highs above $73,500 last month, CoinDesk data show.

The pullback could be attributed to several factors, including U.S. tax payments, the dwindling probability of the Fed rate cuts, and Iran-Israel tensions.

"The geopolitical risk in the Middle East could have been a qualified event to allocate into Bitcoin, but prices traded lower instead of up. This was a real test in cementing Bitcoin as a risk-off asset—unfortunately, Bitcoin somewhat failed as its price stagnated and sold off," Matrixport added.

Late Friday, Bitcoin's blockchain is set to halve per block coin emission to 3.125 BTC from 6.25 BTC, reducing the pace of supply expansion by 50%. Historically, halvings have presaged major rallies, though the magnitude and duration of uptrends have not been consistent.

The consensus in the crypto community is that the impending halving will put cryptocurrency on a long-term bullish path. However, several observers, including Goldman Sachs and JPMorgan, have suggested otherwise, with the later signaling the potential for deeper price correction after the halving.