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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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Bitcoin exchange-traded funds (ETFs) have experienced a historic period of negative flows, marking the longest streak of outflows on record.
According to CoinShares, withdrawals from digital asset investment products reached a fifth consecutive week, amounting to a staggering $6.4 billion over the period.
This downturn has been particularly severe in the United States, where investors pulled $1.16 billion in the last week alone, accounting for 93% of the total outflows.
This marks the 17th consecutive day of declines, the longest in recorded history since CoinShares began tracking in 2015.
Bitcoin has been the primary casualty, suffering a total outflow of $5.4 billion over five weeks. Ethereum and Solana ETFs have also seen significant declines, with respective outflows of $175 million and $2.2 million.
Despite the grim performance, XRP has managed to buck the trend, recording $1.8 million in inflows.
While the current market sentiment remains pessimistic, year-to-date inflows remain positive at $912 million.
However, total assets under management (AuM) have plunged by $48 billion, highlighting the deep impact of this protracted selloff.
The Underlying Factors Driving Massive Outflows
Several factors have contributed to the sustained selling pressure on Bitcoin and other digital asset ETFs.
A key driver has been the economic uncertainty fueled by recent policy announcements from former President Donald Trump.
His proposed aggressive tariff policies have rattled financial markets, increasing concerns about inflation, interest rates, and risk asset valuations, which include cryptocurrencies.
Additionally, the recent $1.4 billion hack on the Bybit exchange still has some investors expressing negative sentiments.
Security concerns in cryptocurrency remain a significant deterrent for institutional investors, as high-profile breaches reinforce the risks associated with digital assets.
The Federal Reserve’s ongoing hawkish stance has also weighed heavily on sentiment.
The last comments from Fed Chair Jerome Powell suggest that interest rates will remain elevated for an extended period, discouraging investment in speculative assets like Bitcoin.
However, the decision coming this Wednesday might change the standing of FED’s point.
Profit-taking has also played a substantial role in the recent market downturn. Prior to this five-week selloff, Bitcoin ETFs experienced a 19-week inflow streak that brought in $2.9 billion on March 3.
Many investors saw this as an opportunity to lock in profits before further market uncertainty set in, leading to the current cycle of redemptions.
Additionally, a recent $300M short on Bitcoin adds to the speculation, making people question whether a further dip is coming.
Market Reaction and Future Outlook
The continuous outflows have led to significant downward pressure on Bitcoin’s price.
Following the record ETP (exchange-traded product) outflows, Bitcoin fell to a four-month low of $78,197, marking a 27% decline from its all-time high of over $109,000.
However, some investors see this as an opportunity to accumulate, as evidenced by Germany’s small but notable inflows exceeding $55 million.
Prominent economist Peter Schiff has issued a warning, predicting that Bitcoin could face even steeper losses if the NASDAQ index continues to decline.
Schiff argues that Bitcoin’s strong correlation with the tech-heavy index makes it particularly vulnerable.
He speculates that if the NASDAQ drops by 20%, Bitcoin could tumble to around $65,000.
This outlook aligns with past market trends, where Bitcoin has mirrored stock market downturns rather than exhibiting the stability associated with traditional safe-haven assets like gold.
Despite the current negative momentum, history suggests that Bitcoin and the broader crypto market have rebounded from similar selloffs.
Institutional interest remains strong in the long run, and macroeconomic factors such as Federal Reserve policy shifts and potential regulatory clarity could influence the next phase of Bitcoin ETF flows.
For now, however, investors remain cautious as they navigate the longest sustained outflow streak in Bitcoin ETF history.
