A key tailwind that reportedly fueled bitcoin’s recent rise above $80,000 appears to be fading.
The 11 US-listed spot bitcoin exchange-traded funds (ETFs), which raised $3.29 billion in investor money between March and April, are now losing funds. And also, of considerable size.
On Wednesday, investors withdrew $635 million from these funds, the largest single-day net outflow since Jan. 29, according to data source SoSoValue. Nor was it an isolated event. Over the past five trading days, the ETFs have lost a total of $1.26 billion, reducing total net inflows since their debut in January 2024 to $58.5 billion from $59.76 billion a week ago.
Bitcoin has stopped recovering. Since last Wednesday, the rally that took prices from $65,000 to over $80,000 has stalled, and momentum is losing steam near the 200-day simple moving average located just above $82,000. In the past 24 hours, bitcoin has fallen more than 2% to $79,400, with analysts attributing the loss to resurgent inflation fears in the US, even though these macroeconomic developments have been largely ignored by Wall Street’s Nasdaq and S&P 500 stock index. Both indices hit new highs on Wednesday.
The $635 million outflow is not a figure that bulls can easily dismiss, especially since strong capital inflows during March and April were widely hailed as bullish catalysts, and the macro picture is worsening due to rising inflation in the United States.
“A persistently high CPI, an incoming Fed under Warsh that markets interpret as more hawkish, or another oil shock can compress bitcoin even with positive net flows. From our perspective, the most useful question is not whether the margin stretch continues, but whether macro conditions remain flexible enough for flows to do their job,” said Adam Haeems, head of asset management at Tesseract Group. Tesseract has over $500 in assets under management.
Still, it’s worth noting that the relationship between ETF and bitcoin flows is not as straightforward as it once was. A correlation study offers a more data-driven perspective on this.
The 90-day rolling Pearson ratio between bitcoin’s daily percentage return and daily percentage change in ETF cumulative net inflows currently stands at just 0.16, statistically indistinguishable from zero and below the peak of 0.68 in February.
In layman’s terms, knowing the direction ETF flows moved on a given day may not offer any clues about BTC price action. That said, big refunds like Wednesday’s are still important.
