Summary
- Bitcoin ETFs faced $645 million in outflows over two days, with Fidelity’s FBTC leading on Tuesday with $246.9 million.
- Analysts linked these outflows to a risk reduction by investors before Fed Chair Powell’s upcoming speech at Jackson Hole.
- The selloff counters a $4.7 billion inflow trend from mid-July to early August, though observers see this as tactical repositioning rather than a widespread institutional exit.
Bitcoin exchange-traded funds experienced $645 million in losses across two trading sessions as institutional investors withdrew funds from crypto markets, marking a significant shift since the digital asset’s summer rise began to falter.
Bitcoin ETFs reported $121.7 million in outflows on Monday and $523.3 million on Tuesday, according to Farside Investors data, while Ethereum funds reflected similar withdrawals of $196.6 million and $422.2 million on those same days.
Fidelity’s FBTC led the withdrawals with $246.9 million, while Grayscale’s GBTC lost $115.5 million and Bitwise’s BITB dropped $86.8 million during this two-day span.
Risk Reduction Ahead of Powell’s Speech
Illia Otychenko, lead analyst at CEX.IO, shared with Decrypt that spot Bitcoin ETFs are seeing withdrawals as investors “reduce risk ahead of the Jackson Hole meeting and Jerome Powell’s address on Friday.”
These recent withdrawals disrupt the momentum seen from mid-July through early August, during which Bitcoin ETFs attracted $4.7 billion in funds at an average of approximately $135 million daily.
Otychenko cited sluggish job growth combined with varied inflation data as reasons that “place the Fed in a challenging position, causing uncertainty in the markets regarding the future of rate cuts.”
Net Taker Volume, which indicates whether buyers or sellers are more active on exchanges, has dropped to its “lowest level since December 2021,” signaling significant selling pressure, he added.
Otychenko observed that Bitcoin’s rallies since March have followed a weakening trend, with “each breakout being less pronounced, with smaller price movements and reduced trading volumes.”
Dean Chen, an analyst at Bitunix, echoed similar views, stating to Decrypt that the outflows are driven by two primary factors: macro de-risking triggered by “U.S. PPI being higher than anticipated” and profit taking at the issuer level ahead of Powell’s Jackson Hole remarks.
He mentioned that BlackRock’s IBIT showed no net flow, indicating “this is more tactical de-risking rather than a broad institutional withdrawal.”
Konstantin Anissimov, global CEO of Currency.com, also told Decrypt that the outflows signify “a general de-risking strategy instead of issues specific to any one ETF.”
He noted that redemptions shifted from BlackRock and ARK on Monday to Fidelity, Grayscale, and Bitwise the next day, suggesting “investors across the board are reallocating their investments.”
Despite significant ETF outflows, Bitcoin’s price has only decreased by 1.5% on the day, according to data from CoinGecko, which Anissimov attributed to buyers utilizing “$32 billion in stablecoin liquidity available on exchanges” to counteract the selling pressure.
He described the current institutional sentiment as “cautious yet not alarmed,” characterizing the actions as “short-term profit-taking,” not a fundamental change.
The market now finds itself in a crucial phase as Powell’s speech nears, with institutional flows expected to remain volatile until there’s clarity on monetary policy.
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