On Tuesday, the crypto market was taken by surprise when Cathie Wood’s ARK 21Shares spot Bitcoin ETF (ARKB) experienced significant outflows. This marked the first time since the introduction of spot Bitcoin ETFs in the United States that one of the ‘Newborn Nine’ exceeded the outflows of Grayscale’s Bitcoin Trust (GBTC). On April 2, ARKB saw an outflow of $87.5 million, approximately 1,300 BTC, as reported by Farside Investors, while Grayscale recorded a daily outflow of $81.9 million.
This event marked a notable shift in Bitcoin market dynamics, sparking concerns and debates among investors and analysts alike. The key question that arises is whether such outflows are a bearish signal for Bitcoin’s price or whether they are a natural part of the ebb and flow of the market.
Are ETF outflows beyond shades of gray worrisome?
Bloomberg ETF Analyst Eric Balchunas offered an analytical perspective on the event, arguing for a broader view of ETF dynamics. In a series of comments on social media platform X, Balchunas downplayed the severity of the outflow.
“To see some of CT opposing ARKB having an outflow day really shows the greedy and short-sighted nature of some people in this space,” he noted, suggesting that even the most reputable ETFs, such as the ones offered of Vanguard experience periodic outflows as part of their operating cycle.
Balchunas further elaborated on the importance of ARKB’s performance, saying, “ARKB has reached $2.8 billion in less than three months. And it’s only the third largest. I would have guessed that third place would be $500 million at this point. The inflows have been so epic, and without the ETFs, BTC is probably at around $30,000.”
This comment highlights the instrumental role of ETFs in driving up Bitcoin’s market price, suggesting that the recent outflows, while notable, represent a minor setback in the grand scheme.
The analyst also addressed the collective behavior of ETF investors, emphasizing that the recent decline in Bitcoin’s price should not be attributed solely to ETF outflows. “The ‘ten’ are a team, and yesterday they saw net inflows as a team, yet BTC fell 6% = the selling (as usual) comes from your fellow so-called hodlers,” he noted, referring to the broader market dynamics and investor behavior that influence price movements.
Renowned crypto expert Scott Melker joined the debate and suggested a possible reason behind ARKB’s outflow. “Probably just a big investor investing in another ETF,” Melker noted, indicating the strategic reallocation of assets within the crypto ETF space.
In response to questions about the transparency of ETF trades, Balchunas emphasized the inherent anonymity of ETF trading, stating: “There is no way to know, it could be someone who is shocked by the volatility. […] it could have been that ARK itself had taken a profit […] Even the issuer doesn’t know who is going in and out of their ETFs. That anonymity is an underestimated feature of ETFs,” shedding light on the privacy aspects that distinguish ETFs from other investment vehicles.
Bitcoin inflows are positive again
Despite the concerns raised by the recent outflows, the ETF market showed renewed resilience yesterday with positive flows of $113.5 million. Fidelity led the pack with $116.7 million in inflows, followed by Blackrock with $42 million and Bitwise with $23 million. ARKB had zero activity. GBTC accounted for $75 million in outflows.
Yesterday’s ETF flows by @FarsideUK
We will be right back. A positive $113.5 million.
Fidelity earned $116.7 million and Blackrock $42 million.$GBTC generated an outflow of $75 million.
There’s not much left to say now, the price is going sideways. The big outflow on GBTC is over. Just consolidate… pic.twitter.com/jmNNTokmS5
— WalvisPanda (@WalvisPanda) April 4, 2024
Noted analyst WhalePanda noted: “There’s not much to say now, the price is going sideways. The big outflow on GBTC is over. Just consolidation and accumulation. 16 days until halving. Currently we [need] $60 million per day to buy the daily mined supply. In 2.5 weeks at these prices that will only be $30 million.”
At the time of writing, BTC was trading at $66,217.
Featured image created with DALL·E, chart from TradingView.com
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