The market's initial excitement about spot Bitcoin ETFs appears to have waned, and recent capital inflows have been unable to keep up with the rapid outflow of Grayscale's Bitcoin Trust (GBTC).
In the week ending April 12, the overall net outflow of spot Bitcoin ETFs was 1,766 bitcoins.
Last Friday and Monday, Fidelity's Wise Origin Bitcoin Fund (FBTC) had an inflow of $0, breaking the continuous daily increase since its launch on January 11. This makes BlackRock's iShares Bitcoin Trust (IBIT) the only spot Bitcoin ETF with capital inflows. Since these instruments began trading, there has been a steady stream of capital inflows.
For other ETFs, including Invesco Galaxy Bitcoin ETF (BTCO), VanEck Bitcoin Trust (HODL), and Valkyrie Bitcoin Fund (BRRR), zero inflows or even occasional outflows are the norm.
Bitcoin was sold off last weekend due to heightened geopolitical tension, falling below the key support level of $64,900 and falling below the 50-day moving average. Over the past week, Bitcoin fell 13%, down 16% from the all-time high set on March 14.
ETF analyst James Seyffart said in an article that it is not uncommon for no capital to flow into an ETF. As an example, he pointed out that about 83% of ETFs in the US market had no capital inflows on Monday.
However, the recent slowdown doesn't mean traders need to get used to the reduced flow of money. Although the popularity of spot Bitcoin ETFs in the first few weeks led to higher trading volumes than any ETF before, traders are likely to see more significant inflows in the future.
Hashdex chief investment officer Samir Kerbage said. “Capital inflows will definitely pick up again.” The company converted its Bitcoin futures fund into a spot Bitcoin ETF in March of this year.
“Many banks, endowments, and pension funds around the world are only now beginning due diligence before considering the strategic allocation of Bitcoin through newly launched ETFs,” Kerbage continued. “As these big financial institutions make decisions in the coming months, capital inflows are likely to increase again, and spot Bitcoin ETFs could become one of the most successful ETF offerings in US history.”
When talking about Grayscale's Bitcoin trust fund GBTC, Seyffart expects that the fund's outflow situation will not be reversed, and the number of bitcoins that GBTC flows out every day is still over 1,000. He stated:
“I really don't want money flowing into GBTC because it has a fee rate of 1.5%, I'd be surprised if GBTC saw any net inflows, and I'd be shocked if it saw a continued inflow of money over any period.”
However, in the short term, Katie Stockton, a technical analyst at Fairlead Strategies, said that the recent Bitcoin sell-off increased the risk of further downside as Bitcoin attempted to reclaim key support levels.
According to Stockton, the next support level, or level where buyers should reasonably step in, is $57,800, which means Bitcoin's price could drop 8% from current levels. Stockton emphasized that if this level is breached, $51,500 will be Bitcoin's next support level, which means that Bitcoin could fall 18% from the current level.
Stockton's short-term momentum indicator has switched from bullish to bearish this week, while medium-term momentum signals have moved from bullish to neutral. The company's long-term momentum signals for Bitcoin are still positive, which convinced Stockton that the current decline in Bitcoin may be a healthy adjustment before the upward trend resumes.
Also, a major bullish event in the coin industry, the “halving” is about to arrive in about 3 days.
“We see the pullback as a break in the uptrend rather than the beginning of a bearish reversal. As Bitcoin recently broke through the 2021 high, our long-term target for it is around $80,600,” Stockton said.
Editor/Jeffrey