Summary
- On July 23, U.S. spot Bitcoin ETFs saw net outflows of $225.2 million, concluding a seven-day inflow period that had attracted nearly $1 billion, as reported by SoSoValue.
- BlackRock's IBIT was responsible for the majority of the outflows, losing $202.5 million, while Morgan Stanley's MSBT was the only Bitcoin fund to gain funds, bringing in $5 million.
- In contrast, spot Ethereum ETFs gained $26.3 million, extending their inflow streak to five consecutive days.
The positive momentum for Bitcoin ETFs has come to a halt. After a week of gains, these funds faced their first significant outflow.
U.S.-listed spot Bitcoin ETFs, which allow investors to hold Bitcoin without needing their own wallets, recorded net outflows of $225.2 million on Thursday, breaking a streak of inflows that had nearly reached $1 billion.
This marks the first negative day for this category since July 13.
When we refer to an "outflow," it indicates that more investors withdrew their investments than those who added funds, requiring the fund to sell some Bitcoin to manage the redemptions. Despite this setback, the funds still ended the week approximately $274 million higher over the five days leading up to Thursday.
The largest fund, BlackRock's IBIT, accounted for the majority of the losses, with $202.5 million exiting the fund. Other funds, including Fidelity's FBTC, Bitwise's BITB, ARK 21Shares' ARKB, Franklin Templeton's EZBC, and WisdomTree's BTCW, also experienced smaller losses. Morgan Stanley's MSBT, however, managed to attract $5 million in new investment.
Bitcoin ETFs data. Image: SoSoValueMarket Reactions as Iran Conflict Intensifies
The timing of these outflows coincided with a downturn in U.S. equities. Ongoing military tensions between the U.S. and Iran, now entering the fifth month, have kept oil prices high. Bitcoin's price momentarily dipped below the crucial $65,000 mark, reaching $64,600, falling below what traders refer to as a death cross. This chart pattern arises when the short-term average price is below the long-term average price, signaling a potential bear market.
Bitcoin price data. Image: TradingviewThe Crypto Fear & Greed Index, which assesses market sentiment and volatility on a scale from 0 (extreme fear) to 100 (extreme greed), decreased by three points to 28 on Thursday. This figure remains firmly in the "fear" zone, indicating heightened anxiety among investors, marking the most fearful sentiment observed this month.
Previously, we highlighted that the recent inflow streak followed a challenging eight-week period that saw over $8.2 billion withdrawn from these funds. Eric Balchunas of Bloomberg Intelligence has likened this cycle to the 22-year history of gold ETFs, suggesting a pattern of "two steps forward, one step back" for Bitcoin funds.
The earlier outflow period was so significant that CoinShares' James Butterfill described it as the "largest run of outflows we've ever seen" when inflows resumed in early July.
Meanwhile, Ethereum funds remained unaffected by the negative sentiment, gaining $26.3 million and extending their inflow streak to five days. This divergence suggests a rotation within the crypto market rather than an overall exit. The upcoming Federal Reserve meeting on July 28-29 will be crucial for Bitcoin's future, as the central bank's decisions regarding interest rates could significantly impact the macroeconomic landscape, influencing Bitcoin's trajectory.