Bitcoin ETF Outflows Surge, Fuelling Fears of Market Turbulence


In a rather tumultuous turn of events, Bitcoin Exchange Traded Fund (ETF) outflows have once again taken a hike, signaling a possible cascade effect on the performance of the leading cryptocurrency. Given the robust correlation between the performance of the Bitcoin’s price and the inflows and outflows of these ETFs, the increasing outflows could potentially trigger an unwelcome low tide in the Bitcoin market.

The ripples caused by the expanding outflows are most notable in the cases of two financial behemoths, ARK Invest and Grayscale. Interestingly, while Grayscale’s Spot Bitcoin ETF has often been the usual suspect linked to the ETF outflows, due to its elevated fees, another heavyweight has now entered the scene. Cathie Wood’s ARK Invest, on the back of a significant reduction of its ETF portfolio, set a discomforting new record for the esteemed investment firm.

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Within just a day, the ARK 21Shares Fund (ARKB) was jolted by a colossal outflow of $87.5 million on Tuesday, April 2. The staggering sum trumped the outflows of Grayscale, which saw around $81.9 million leave its confines on the same day. What elevates concerns is that for the duo, it was the second day in a row of outflows. The development was particularly unnerving with regard to ARK Invest. While Grayscale managed to curtail its outflows from $302.6 million on Monday to $81.9 million on Tuesday, ARK Invest witnessed a stark spike in outflows, soaring from a mere $0.3 million on Monday to a whopping $87.5 million on Tuesday, marking a mind-boggling 29,000% increase in outflows within a day’s span.

The tempestuous outflow seemed to have spared the other ETFs though, as they continued to ring in positive numbers. Despite Monday casting a shadow with a negative net flow of $85.7 million, Tuesday ushered a ray of hope with a comforting net inflow of $40.3 million.

Since the green signal for Spot Bitcoin ETFs in January, the Bitcoin price has usually ridden on optimistic waves. However, there have been unsettling episodes wherein retracting funds have landed blows on Bitcoin’s price, triggering crashes. An echo of this could be heard in January, not long after the ETFs were given the thumbs-up, when the outflows spiraled and the Bitcoin price was churned into a decline. Similar tremors were felt in March, when a negativity engulfed the inflows between March 18 and March 22, leading to a Bitcoin crash from $73,000 to $61,000.

From the look of things, the recent trend of outflows from the Spot ETFs is highly likely to spell trouble for the Bitcoin price unless the inflows maintain an upward march through the week. In light of the prices inching above $66,000 after positive inflows on Tuesday, any faltering could steer the prices towards a potential downward spiral, possibly as low as around the $60,000 mark. While the Bitcoin market continues to brave the stormy waters, only time will reveal whether the tide will turn in its favor.