Expert: Bitcoin ETFs Remain Strong Despite Record Outflows

Between August 27 and September 6, U.S. Bitcoin exchange-traded funds (ETFs) saw outflows totaling $1.2 billion. While this marks the longest streak of outflows since the funds were first introduced, experts believe it’s not a sign of trouble but rather a normal part of the market's growth cycle.

The recent dip in Bitcoin's (BTC) price was accompanied by significant outflows from 12 U.S. Bitcoin ETFs. Despite concerns, this trend could be viewed as a natural step in the development of ETF categories.

"It's two steps forward, one step back," said Eric Balchunas, senior ETF analyst at Bloomberg. "That's how most ETF categories are established and mature. Nothing rises in a straight line—there's always fluctuation because these funds cater to both long-term investors and traders."

According to Farside Investors, the $1.2 billion in outflows represents about 3% of the total assets in Bitcoin ETFs, which now stand at $46 billion. Balchunas noted that a truly alarming outflow would be in the range of 15% to 20%.

Bitcoin ETFs initially experienced a surge of cash inflows, with $12 billion pouring into the funds during the first two months of trading, according to Bianco Research. However, the pace has slowed, with $4 billion added over the next six months and only $1 billion over the past three months.

Bianco Research was more cautious about the ETFs’ future, highlighting the slowing inflows. In contrast, Balchunas emphasized the importance of minimizing outflows during downturns. "The key to building a successful ETF category is not just attracting money during good times but also limiting outflows during bad times," Balchunas said, pointing to previous events like the Mt. Gox sell-offs and government-related liquidations, which saw ETFs quickly recover after only minimal losses.

"Bitcoin ETFs have done a remarkable job preventing Bitcoin from plummeting," Balchunas added. "They've saved Bitcoin from hitting rock bottom on several occasions in the past few months." $BTC $ETH $BNB