Digital investment products are bleeding cash, which include spot Bitcoin ETFs, as the price of Bitcoin is clinging to previous all-time highs, while there are global economic headwinds.
For three weeks in a row, there have been outflows recorded in these investments, and data from CoinShares shows that within 7 days, the outflows reached a staggering $435 million.
Outflows
The outflows in a month have now reached $102 million across different coins, including Bitcoin, Solana, and Ethereum.
James Butterfill, the Head of Research at CoinShares, said that new ETF issuers in the United States had also seen a slowdown in their inflows.
He stated that while they were still recording inflows, they were significantly less than what they had seen before.
The outflows recorded by Grayscale’s Bitcoin Trust recently subsided, but Butterfill said that incremental inflows recorded by other funds were overshadowed by the outflows from GBTC.
The asset manager’s $19 billion fund has depleted considerably and its outflows have been higher than the inflows recorded by the other funds that were launched back in January.
Data from Farside Investors showed that last week, there had been net outflows of $328 million recorded from spot Bitcoin ETFs.
During this period, the outflows from Grayscale Bitcoin Trust alone were $454 million, which outweighed any allocations seen in the entire group.
Economic situation
In March, Bitcoin had managed to surpass its previous all-time high. But, data from CoinGecko shows that it has recorded a decline of 12% in the past month, as it dropped to $63,000.
The decline comes as traders are focused on the Federal Reserve and how the monetary policy in the US in the next few months could be influenced by economic data, as inflation continues to remain strong.
Butterfill said that it had been all about ETFs for a while, but now the interest rate narrative appears to be having a greater influence on prices.
While the Fed is expected to continue to hold interest rates steady this week in its policy meeting, market participants will be looking for hawkish, or dovish tones.
Lower borrowing costs typically benefit risk assets and they have been dented because traders now believe interest rate cuts are not likely to happen anytime soon.
The concerns
Last week, BlackRock’s spot Bitcoin ETF also saw its 71-day streak of inflows derailed, as the price of Bitcoin declined.
Since it was approved in January, BlackRock’s ETF has pulled in about $17.5 billion in Bitcoin, but it did not record any inflows for three straight days and neither were there any outflows.
While spot Bitcoin ETFs have seen a decline in their momentum, Butterfill stated that it was not a big concern because digital investment products have recorded their best year so far.
This is because they have seen inflows rise to a whopping $13 billion. Moreover, analysts believe that inflows into spot Bitcoin ETFs are likely to pick up again.
It is because the market is still digesting the newly launched investment product and more participants are expected to join.