Bitcoin’s Struggles Continue as Crypto Products Sees First Outflow in Five Weeks

According to CoinShares‘ Monday report, crypto investment products witnessed a substantial $600 million net outflow last week, the largest since March 22. The outflows were entirely focused on Bitcoin, with $621 million leaving the asset’s investment products. However, this bearish sentiment also led to $1.8 million in inflows into short-Bitcoin investments.

Consequently, Bitcoin struggled throughout the week, falling to as low as $65,000 on Friday. The largest crypto asset has maintained a bearish sentiment, keeping it over 11% below its all-time high of $73,600.

The outflows came amid market uncertainty following conflicting US economic data and the Federal Reserve’s decision to hold interest rates steady.  Bitcoin grappled on the decision day, pumping to $70,000 before dumping to $67,000 later. Despite this, total net inflows into the ETFs since January remain at $15.1 billion.

The net outflows, combined with a 5% drop in Bitcoin’s price and a broader crypto market sell-off, resulted in global assets under management falling from $100 billion to $94 billion. The trading volume of digital asset investment products also remained low at $11 billion, significantly lower than the weekly average of $22 billion this year.

US ETFs Struggles

Bitcoin Exchange-Traded Funds (ETFs) witnessed a combined $580.6 million in net outflows last week, breaking a 19-day streak of consecutive inflows. This sudden shift in investor sentiment marks the first weekly outflow in five weeks.

The Grayscale Bitcoin Trust (GBTC) accounted for a substantial portion of these outflows, with a net outflow of $274 million. Other notable outflows included Ark Invest’s ARKB and Fidelity’s FBTC, with $149.7 million and $146.3 million in net outflows, respectively.

In contrast, BlackRock’s IBIT ETF attracted $41.6 million in net inflows, bucking the trend of outflows seen in other Bitcoin ETFs. This suggests that some investors remain bullish on Bitcoin’s prospects despite the market volatility.

US spot Bitcoin ETFs generated $8.73 billion in trading volume for the week, a notable decrease from the peak of $32.69 billion from March 4–8. This significant outflow and decline in trading volume reflect the ongoing market uncertainty and investor caution.

Ether Investment Products Defies Trend

Despite the outflows from Bitcoin investment products, Ethereum-based investment products saw a notable trend reversal, with $13 million in net inflows globally last week. This development suggests a shift in investor sentiment, favoring Ethereum over Bitcoin. 

According to Bitfinex, Ethereum spot ETFs are expected to capture 10–20% of the flows currently directed toward Bitcoin ETFs once they become active. This prediction parallels the historical launch of gold and silver ETFs. 

On May 23, the US Securities and Exchange Commission approved 19b-4 forms for eight spot Ethereum ETFs from prominent firms like BlackRock and Fidelity. However, trading is pending the effectiveness of the issuers’ S-1 registration statements, a process that may take several weeks.

Bitcoin traded at $65,446 at press time, while Ethereum exchanged hands for $3,504.