BlackRock's Bitcoin ETF faced a record outflow of $400 million earlier this year. Is this just New Year's profit taking or a sign of changing investor sentiment?
The day after the financial markets closed for the New Year, Jan. 2, saw the largest daily outflow of funds from BlackRock's $BTC ETF, traded under the ticker IBIT.
Investors withdrew as much as $332.6 million from the fund, bringing this withdrawal to $332.6 million, surpassing the previous record of $188.7 million set on December 24. Are investors getting pessimistic or are they just taking profits at the start of the year?
The recent outflow of funds is not unique, however, with the IBIT fund recording three consecutive trading days of investor withdrawals totaling nearly $400 million, the highest amount on record.
Despite the last few bitter days, BlackRock's bitcoin ETF has nothing to be ashamed of, as it was the third most important ETF across financial markets in terms of new capital raised from investors in 2024.
Comparison with other ETFs
What is notable, however, is that other bitcoin ETFs saw inflows outweigh outflows on January 2. Funds from Bitwise, Fidelity and Ark 21Shares have raised a total of over $100 million.
Even Grayscale's Bitcoin Mini Trust saw inflows of $6.9 million, although the larger GBTC fund faced capital outflows of $23.1 million.
Overall, this brings the total investor withdrawals for the day on January 2 to $242 million, and that's largely due to BlackRock's ETF.
Despite these negative outflows, however, experts suggest that this may be a temporary phenomenon. The long-term outlook for bitcoin ETFs remains optimistic.
Predictions for the future
Looking ahead, Bitcoin pioneer Adam Back is optimistic about the future of bitcoin ETFs. He predicts that they could dominate in 2025 thanks to increased fund inflows and the rising price of Bitcoin.
According to Back, 2025 will see the approval of combined Bitcoin and Ethereum ETFs, the launch of options trading on spot Ethereum ETFs and the introduction of other innovative products.
In addition, he also expects the launch of staking for spot Ethereum funds and the approval of the Solana ETF, which would further expand investment options for those interested in investing in cryptocurrencies.
So while ETF withdrawals may have been causing wrinkles on investors' foreheads of late, it is important to take a long-term view of developments. All factors point to a positive development in the cryptocurrency environment.
