U.S. spot Bitcoin ETFs have experienced significant outflows, with a total of $910 million leaving the funds over the past two weeks. This week alone, investors withdrew $228.6 million, following a $681.1 million outflow the previous week. The trend has pushed the ETFs into negative territory for October, with a cumulative loss of about $615 million. Despite this, the ETFs have attracted $57.3 billion in net inflows since their launch in January 2024.
The outflows have been driven by a combination of factors, including a rise in inflation and expectations of further Federal Reserve rate hikes. The consumer price index showed a 3.7% year-over-year increase in September, exceeding forecasts, and a hotter-than-expected producer price reading reignited bets on another rate hike. This has made riskier assets like Bitcoin less attractive compared to the nearly risk-free returns of Treasury yields.
The recent volatility has also impacted leveraged crypto positions, with nearly $950 million in positions liquidated over 24 hours. Most of these were bullish longs, reflecting the uncertainty in the market. The drop in Bitcoin’s price has also pushed it below the average ETF holder’s cost basis, according to Nexo analyst Iliya Kalchev. This has further discouraged investors from holding the asset.
Despite the outflows, the ETFs remain a significant fixture in Wall Street’s crypto exposure. With total net assets estimated at around $104.29 billion, they continue to serve as a key indicator of investor sentiment. However, the recent performance highlights the challenges faced by Bitcoin ETFs in a market influenced by macroeconomic factors.
The negative trend has extended to other cryptocurrencies as well, with Ethereum and Solana ETFs also posting losses this month. As the market continues to navigate inflationary pressures and potential rate hikes, the performance of these ETFs will remain a closely watched indicator of investor confidence in the crypto space.