Bitcoin exchange-traded funds (ETFs) recently experienced a notable shift in investor behavior, with a substantial outflow of $568.8 million recorded in a single day following three days of consistent inflows, as per reports from Farside investors.
Bitcoin ETF Developments
The Fidelity Wise Origin Bitcoin Fund saw the largest outflow, totaling $258.7 million in a single day, representing 45% of the overall net outflow amount. Following closely behind was Ark 21Shares’ ARKB with withdrawals of $148.3 million, and BlackRock’s IBIT ETF faced significant outflows of $124 million.
While some other ETFs experienced minor outflows and others remained inactive, the varied activity reflects a notable divergence in market dynamics.
These recent outflows in Bitcoin ETFs mark the second-highest daily net withdrawal since their inception, coming close to the record outflow of $671.9 million on 19 December.
The wave of outflows coincided with a drop in Bitcoin’s price, falling below $95k shortly after surpassing the $100k mark on 07 January.
Expert Insights
Addressing the significant price drop, Ryan Lee, Chief Analyst at Bitget Research, commented,
“The decline in Bitcoin’s value appears to be driven primarily by positive US economic indicators hinting at possible interest rate hikes.”
Significantly, the Crypto Fear & Greed Index, a vital indicator of market sentiment for Bitcoin and other digital currencies, transitioned from “Extreme Greed” to “Greed” over the past month, dropping from 78 to 69.
This decline suggests a more cautious outlook among market participants amidst recent price fluctuations.
While the sentiment index shows strong positive sentiment, some traders remain hesitant to draw definitive conclusions, given the ongoing price volatility in the Bitcoin market.
In line with this, in a post dated 9 January, Daan Crypto Trades remarked,
“The current indicators don’t provide clear signals so early in the year, especially considering the trend disruption in December and the typically unpredictable market behavior at the beginning of the year.”
Ethereum ETF on the Rise
Although Bitcoin ETFs dominate market interest, Ethereum ETFs are progressively narrowing the gap, highlighted by their impressive $35 billion inflows in 2024, despite recent outflows amounting to $159.4 million.
The prediction by crypto analyst Lark Davis suggesting that ETFs could hold 10-20% of Bitcoin’s supply during peak periods raises concerns about a potential supply shortage. Nevertheless, Ethereum’s resilience and growing investor trust indicate a shifting trend.
If these trends persist, 2025 could witness a significant moment, potentially positioning Ethereum ETFs as frontrunners in the cryptocurrency investment landscape.