Bitcoin ETFs Have Lost Over $2.4 Billion This Week Alone

On Wednesday, spot Bitcoin exchange-traded funds experienced a substantial outflow of $759 million, marking the second-largest daily withdrawal in nearly 14 months, as investors continued to steer clear of riskier assets, thereby causing the price of the underlying asset to drop.

This drop followed a record-setting day where spot Bitcoin funds had $1.1 billion in daily outflows, according to Farside Investors, a U.K. asset management firm. The ETFs have lost more than $2.4 billion this week, representing a striking turnaround from their earlier success.

The cryptocurrency markets, alongside other assets, have been shaken by the looming possibility of a trade war due to the new Trump administration’s tariffs, rising inflation, and declining consumer confidence in the U.S. economy. Last Friday, the University of Michigan notably reduced its consumer sentiment index to its lowest level since November 2023.

Additionally, the recent $1.4 billion hack of the Bybit exchange, the largest of its kind, has contributed to the unease among crypto investors.

Bitcoin is currently trading below $84,000, remaining relatively stable over the past 24 hours but down approximately 17% since late January, according to data from CoinGecko. The largest cryptocurrency by market capitalization is trading at levels last seen in November 2024, with some experts predicting that BTC could drop to $70,000.

Ethereum, the second-largest digital asset, has also faced significant declines over the past month, currently trading at more than three-month lows.

The approval of the first spot Bitcoin funds by the Securities and Exchange Commission in January indicated a more favorable regulatory environment, sparking increased investor interest in crypto-based products that issuers have been keen to address. The 11 ETFs that are currently trading manage over $90 billion in assets.

Spot Ethereum funds, which obtained SEC approval in July, manage over $8 billion in assets, although they have seen $222.4 million in outflows this week.

In recent months, a number of asset managers have submitted applications to the U.S. Securities and Exchange Commission for new funds based on the performance of various cryptocurrencies such as XRP, Litecoin, Cardano, Polkadot, and Solana, in response to the growing demand for crypto-focused funds.

In a Telegram message to Decrypt, markets analyst Noelle Acheson, author of the newsletter Crypto Is Macro Now, remarked that the decline of Bitcoin is “part of the risk-off shift, with growth concerns impacting nearly all liquid markets.”

However, Acheson maintained a positive outlook, stating that “in the world of crypto, there are other narratives at play, and lower price levels will attract new investors.”

“The actions taken by the SEC are positive developments across the board, and we can anticipate signs of more ETF issuances in the near future, possibly within days,” she said. “Additionally, major traditional institutions are preparing to launch new crypto services, which will further attract macro investors—we should see this unfold in the upcoming months.”

Edited by Andrew Hayward