Since their launch in mid-January, the impressive inflows into the newly approved U.S. bitcoin ETFs have dominated financial headlines. More than $12 billion flowed into the products in one quarter, setting an overwhelming record. Now the tide is starting to turn.
On January 11, 2024, nearly a dozen fund providers got the green light to launch the first spot-based bitcoin ETFs in the United States. Issuers include financial giants such as BlackRock, Fidelity and many others. Since the launch, hundreds of millions of dollars have flowed into the products each week, driving the price of bitcoin significantly higher. The recent wave of negative headlines for crypto assets and a challenging macro environment have unsettled ETF buyers. Yesterday, U.S. bitcoin ETFs saw over $500 million in outflows.
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BlackRock's impeccable record broken
Aside from Grayscale's Bitcoin Trust (GBTC), most ETFs saw daily inflows. At times, daily net inflows exceeded $600 million, with much of that going into BlackRock's IBIT and Fidelity's FBTC. ARKB, a joint fund of US-based ARK Invest and Swiss ETP issuer 21Shares, ranked third in terms of total assets under management (AuM). In recent weeks, inflows have slowed, and on April 24, the run on IBIT came to a halt. A day later, Fidelity's FBTC lost AuM for the first time.
| Date | IBIT | FBTC | BITB | ARKB | GBTC | Others | Total (USDm) |
|---|
Breakdown of US Spot Bitcoin ETF inflows and outflows (USD million) / Source: Crypto Valley Journal
Until yesterday, BlackRock was able to maintain its unblemished history. Then, rising macro concerns and a reversal in equity markets forced the sales team of the world's largest asset manager to its knees. An outflow of $563 million was the end-of-day figure, according to CVJ's automated ETF overview. Instead of "buy the dip", it was "risk off". The price of bitcoin corrected over 10% in two days. Now, the cryptocurrency is just slightly above the average entry price of ETF investors, which is estimated at $56,989, according to the editors' calculations.
Bitcoin (BTC/USD) with average entry price of ETF investors (blue) / Source: CVJ.CH, TradingView
Crypto wave not over, says BlackRock manager
BlackRock, however, remains unfazed. Robert Mitchnick, head of digital assets at the world's largest asset manager, expects an upcoming wave of entry from sovereign wealth funds, pension funds and endowments. He told crypto publication CoinDesk. And this interest is nothing new. BlackRock has been discussing bitcoin with these types of institutions for several years.
"We're seeing a resurgence of discussion around bitcoin. Many of these interested entities-whether they are pension funds, endowments, foundations, sovereign wealth funds, insurers, other asset managers, or family offices-are continuing to explore and conduct research." - Robert Mitchnick, Head of Digital Assets, BlackRock
