Investors pulled almost $423 million from Bitcoin-focused exchange-traded funds in the past four days, the largest selloff since such funds started to gather mainstream interest earlier this year.
Spot Crypto ETFs Witness Unprecedented Outflows
The trend of withdrawals happened in the wake of a global market downturn, set off by disappointing US jobs data and increasing fears of recession.
The weakness in corporate earnings and adverse seasonal trends have been prompting a market sell-off that hit risk assets indiscriminately. According to Bloomberg, Bitcoin has fallen over 16% within the past 36 hours, erasing more than $150 billion in market value. The second largest cryptocurrency, Ether, has declined the most since 2021.
Massive Turbulence Hits the Market
This downturn represents the first major test for digital assets in the era of U.S. cryptocurrency ETFs, which were approved for the first time by the Securities and Exchange Commission earlier this year. The spot crypto ETFs, which opened up the ease of trading in Bitcoin to so many everyday investors, have now recorded unprecedented outflows.
The spot Ether ETFs that launched in July, after getting the nod from the SEC, have also had huge outflows. Net outflows have now hit over $500 million since the inceptions of these funds.
After all this upheaval in markets, large holders of spot crypto ETFs such as BlackRock, Fidelity, Grayscale, and MicroStrategy have not liquidated their holdings yet. So far, the selling pressure hasn’t resulted in disruptions to the market.
