Launched in January, Bitcoin spot exchange-traded funds saw record inflows their first two months, but have had net outflows each of the last three weeks.
Crypto investment products bled $435 million in the last week, CoinShares said in its latest report. As per usual, the majority of the outflows came from Grayscale’s Bitcoin Trust, though the report noted these were decelerating.
But the other ETFs saw 50% less inflows last week than they did in the previous week. And some of the funds — including Fidelity’s, ARK Invest’s, and Bitwise’s — even saw outflows on some days.
BlackRock’s juggernaut ETF, meanwhile, experienced days without any flows whatsoever.
But that doesn’t mean traders should worry. The ETFs are still “extremely early in adoption,” Nate Geraci, president of the ETF Store, recently told Fortune.
Financial institutions “have yet to even allow their brokers to solicit purchases of spot Bitcoin ETFs, and registered investment advisors are still slowly wading into the category,” Geraci said.
Kelly Ye, portfolio manager at crypto investment firm Decentral Park Capital, echoed Geraci’s words. “Institutional inflow has not yet materialised,” she wrote in a weekly market report
“There is encouraging news that Morgan Stanley, one of the largest wealth management platforms, is exploring allowing brokers to recommend Bitcoin spot ETFs,” Ye said. “We expect to see more sales-driven inflows as more platforms open up.”
Ebbs and flows
Even for products as successful as the Bitcoin spot ETFs, days or weeks of outflows are to be expected, analysts say. And it’s perfectly normal for an ETF not to have any flows whatsoever.
ETF share “creation or redemption will only happen if there is a large enough mismatch in supply and demand,” Bloomberg Intelligence ETF analyst James Seyffart wrote on X.
And the mismatch needs to be big enough that it’s cheaper to go through that process instead of making markets the usual way through hedging strategies.
In other words, zero inflows doesn’t necessarily mean there’s zero demand.
BlackRock’s emerging-markets ETF “traded about $70 billion worth of shares between mid-January and mid-April and saw $0 flows every single day,” Bloomberg Intelligence ETF analyst Eric Balchunas said.
“The bottom line is that flows in any ETF category aren’t going to go up in a straight line — they’ll ebb and flow over time,” Geraci said.
Tom Carreras is a markets correspondent at DL News. Got a tip about Bitcoin ETFs? Reach out at tcarreras@dlnews.com