Exchange-Traded Funds (ETFs) for spot Bitcoin in the United States recorded a record outflow of $1.17 billion last week, marking the second-largest outflow since these funds were launched in January 2024.
Key reasons behind these outflows
Analysts believe this decline is due to several key factors:
* Profit-taking: After substantial increases in Bitcoin's price over the past period, many investors, especially large institutions, have moved to sell part of their holdings to realize profits.
* Macroeconomic factors: There is growing concern regarding the Federal Reserve's policies and inflation indicators that came in stronger than expected, prompting investors to redirect their funds towards safer assets such as government bonds or to hold cash.
* Market volatility: These outflows indicate that Bitcoin exchange-traded funds still exhibit the same volatility characteristics that define the broader cryptocurrency market and that they are not immune to major sell-offs occurring during times of uncertainty.
Note: Despite these large outflows, some still view them as merely "short-term headwinds" and believe the long-term demand for Bitcoin remains strong, especially as large entities continue to accumulate holdings.
