In the first seven days of Bitcoin ETF operation, significant fund outflows were recorded, totaling $76 million in net outflows, according to data from Bloomberg ETF analyst James Seyffart.
Seyffart, in a January 23 post on the X platform, characterized this seventh day of operations as “bad” for Bitcoin ETFs in what he called the “Cointucky Derby.” He emphasized that Grayscale leads net outflows among these funds, with an outflow of $640 million in a single day. Additionally, he noted that these outflows are not slowing down but increasing, marking the largest outflow to date for the Grayscale Bitcoin Trust (GBTC), with a total cumulative outflow of $3.45 billion.
Update: BlackRock's numbers are in for the #Bitcoin ETF Cointucky derby. Third biggest inflow day for $IBIT yet at $272 million. Only -$76 million in net outflows for the day. https://t.co/ySE0edbz4c pic.twitter.com/RzgH6qn5Md
— James Seyffart (@JSeyff) January 23, 2024
Despite the Significant Outflows, Bitcoin ETFs are Registering Overall Positive Total Inflows
Beyond this negative outlook for the new BTC products, Seyffart argues that the outlook for spot Bitcoin ETFs remains positive. Overall, there were over $1.1 billion in total inflows in this fund category, even after considering the GBTC outflows.
Seyffart indicated that, although GBTC outflows seem “unceasing” at the moment, he expects the selling trend led by GBTC to calm down in the next two weeks.
Much of the outflows from Grayscale’s recently converted GBTC fund were linked to outsized selling from the FTX estate. According to sources familiar with the matter, by January 22, the FTX estate had sold approximately two-thirds of its 22.8 million GBTC shares, accounting for around $600 million of the total net $3.4 billion in GBTC-related outflows.
The price of Bitcoin experienced a significant decline since the approval of the 10 BTC ETFs on January 10, dropping from a high of $49,100 to a low of $39,000 on January 23. Currently, BTC is holding around $38,800 according to TradingView data.
This decline in the price of Bitcoin coincides with a sudden and sharp decline in open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME), suggesting a decrease in enthusiasm among institutional investors to gain leveraged exposure to Bitcoin. According to CoinGlass data, open interest on the CME fell from a near-record high of $6.4 billion on January 12 to $4.4 billion at the time of publication.
Despite notable outflows from BTC ETFs in their early days, the overall outlook remains positive, and it is expected that the ongoing GBTC outflows will stabilize in the coming weeks, providing a more stable scenario for these financial instruments.