Spot Bitcoin ETFs traded in the United States have recently seen significant outflows, signaling a reversal after months of robust investor interest. When these funds launched in January, they attracted major inflows, particularly during March and April, bringing in over $3.29 billion in fresh capital. This momentum, however, has now shifted. According to the latest data, 11 different spot Bitcoin ETFs saw a collective outflow of $635 million in a single day—a figure that marks the largest daily withdrawal since January 29.
Record withdrawals from ETF funds
Over the past five trading days, these ETFs have experienced a total outflow of $1.26 billion. As a result, the net inflow for ETFs this year has fallen to $58.5 billion, down from last week’s $59.76 billion. The sharp decline within just one week reflects a notable dip in overall investor appetite for Bitcoin ETFs.
Bitcoin’s price has also been unable to maintain its upward trajectory in the face of these developments. Last week’s rally, which started at $65,000 and surged above $80,000, lost steam right at the 200-day simple moving average just above $82,000. As of the latest 24-hour period, Bitcoin dropped more than 2% to $79,400. Analysts largely attribute this decline to growing inflation fears in the United States. Despite this, benchmark indices such as the Nasdaq and S&P 500, rather than faltering, climbed to fresh all-time highs yesterday.
Macroeconomics and ETF flows
Analysts have frequently linked the surge in spot Bitcoin ETF inflows in March and April to the onset of a cryptocurrency bull market. Now, however, the combination of substantial ETF outflows and climbing inflation in the US is fueling a risk-off mood among investors. Experts caution that these outflows should not be underestimated in the current climate.
Adam Haeems, an executive at asset management firm Tesseract Group, explained that persistently high inflation, coupled with the prospect of a more hawkish Federal Reserve led by Warsh or the threat of a new oil shock, could keep Bitcoin under pressure even if net ETF inflows remain positive. “For us, the key question is not whether upward movement will persist, but whether macro conditions will allow fund flows to have a meaningful impact,” Haeems remarked.
Tesseract Group is recognized as a global cryptocurrency investment firm managing over $500 million in assets. The company is known for comprehensive analysis of the interplay between macroeconomics and digital asset markets, managing a broad range of digital asset funds across the sector.
Connecting ETF flows and Bitcoin weakens
The correlation between Bitcoin’s price and ETF fund flows has noticeably weakened. The most recent analysis shows that the 90-day correlation coefficient between daily Bitcoin returns and percentage changes in ETF net flows sits at just 0.16. This reading, well below the February peak of 0.68, is considered statistically insignificant by most analysts.
In summary, daily ETF inflow and outflow figures no longer offer a reliable indicator for predicting Bitcoin’s price direction. Even so, major outflows like those seen on Wednesday can continue to exert significant pressure on the market.
