The recent surge in outflows from Bitcoin exchange-traded funds (ETFs) has highlighted investor caution amidst economic uncertainty, with nearly $218 million withdrawn from these investment vehicles in response to a weak U.S. economic report.
According to data from London-based investment firm Farside Investors, the robust influx of capital into Bitcoin ETFs, which had been a notable trend in recent months, came to a halt as investors reacted to indications of slower-than-expected growth in the American economy during the first quarter.
The Federal Reserve’s choice to uphold interest rates at higher levels, intended to counteract inflation, fostered a cautious attitude among investors. This led them to move away from assets considered “risk-on,” like Bitcoin.
Since the Securities and Exchange Commission’s approval of 11 Bitcoin ETFs in January, these investment products had garnered significant popularity, attracting record inflows in the weeks following their launch. Notably, BlackRock’s iShares Bitcoin Trust (IBIT) had emerged as a preferred choice among investors.
However, the recent outflows signify a shift in investor sentiment, with IBIT witnessing no new inflows after a 71-day streak of positive cash flows. Grayscale’s ETF experienced a loss of $139.3 million, while Fidelity’s fund (FBTC) recorded its first outflow since inception, with a loss of $23 million.
The price of Bitcoin currently stands at $63,562, reflecting a 1.1% decline over the past seven days. Despite reaching a new high of nearly $74,000 per coin last month, Bitcoin has traded below its 2021 highs of $69,000 throughout April.
As economic uncertainties persist, investors remain cautious, navigating market dynamics and adjusting their investment strategies accordingly.