Bitcoin ETFs See Net Outflows for the Third Day in a Row

In recent days, both Bitcoin and Ethereum ETFs have seen a drop in funds as investors become cautious due to rising geopolitical tensions. These tensions are causing Bitcoin ETFs Outflow, pushing investors to move their money away from riskier assets like cryptocurrencies. In this article, we’ll dive into how these events are impacting Bitcoin and Ethereum ETFs, why they’re losing funds, and what it could mean for the future of the crypto market.

Bitcoin ETFs Record Net Outflows for the Third Consecutive Day

Bitcoin ETF Flow: Image Source Farside

U.S.-listed Bitcoin (BTC) and Ethereum (ETH) spot exchange-traded funds (ETFs) have played a role in the recent downward pressure on cryptocurrency prices, with Bitcoin declining by 6% and Ethereum by 10% this week.

On October 3, investors pulled $54.2 million from Bitcoin ETFs, marking the third consecutive day of net outflows and bringing the three-day total to $361.2 million, as reported by Farside Investors.

The primary outflows on that day were seen from Ark's ARKB, which experienced withdrawals of $58 million, followed by Fidelity's FBTC, which saw $37.2 million withdrawn. In contrast, BlackRock's IBIT recorded an inflow of $36 million, and Grayscale's GBTC had a modest outflow of $5.9 million for the week.

Overall, the 11 ETFs have accumulated $18.5 billion in investor funds since their inception. Investors have seen average returns of 3-10%, with the average cost basis for deposits ranging from $54,911 to $59,120, according to data from Glassnode.

Glassnode’s methodology estimates a break-even point for ETF investors by analyzing Bitcoin deposit prices for the top three ETF providers. The data indicates that the cost basis is $54,911 for Fidelity's FBTC, $55,943 for Grayscale, and $59,120 for BlackRock.

Strong Support Levels and Shifting Flows in Bitcoin and Ethereum ETFs

According to reports, In 2024, these cost bases have provided strong price support for Bitcoin, with the lower range being tested multiple times throughout bull market corrections.

On the Ethereum side, there was a net outflow of $3.2 million from ETH ETFs on Thursday. Grayscale's ETHE faced significant outflows of $14.7 million, pushing its total withdrawals to $2.9 billion. In contrast, BlackRock’s ETHA recorded an inflow of $12.1 million. As per data from Farside Investors, the overall net outflow from Ether ETFs now stands at $555.4 million.

Despite these movements, the performance of BTC and ETH ETFs remains noteworthy when compared to industry benchmarks. Nate Geraci, President of the ETF Store, pointed out that "of the 525 ETFs introduced in 2024, 13 out of the top 25 are connected to either Bitcoin or Ethereum."

Short-Term Volatility vs. Long-Term Potential: The Future of Bitcoin and Ethereum ETFs

The consistent net outflows from both Bitcoin and Ethereum ETFs signal a short-term bearish sentiment among investors, driven largely by global geopolitical uncertainties and shifting market dynamics. 

The significant outflows from Bitcoin ETFs, totaling over $361.2 million in just three days, suggest a cautious approach by investors as they re-evaluate their positions amidst market volatility. 

Similarly, the $555.4 million net outflow from Ethereum ETFs further indicates investor hesitation towards high-risk assets like cryptocurrencies. This shift away from crypto ETFs can contribute to downward price pressures, as reduced inflows often translate into weaker buying support for these assets.

Despite the recent outflows, there is still a resilient foundation for both Bitcoin and Ethereum ETFs, bolstered by their robust cost bases and long-term investor confidence. For instance, the strong support levels identified in 2024 around the average cost basis have been crucial in preventing sharper declines during market corrections, suggesting a certain level of stability. 

This could indicate that while short-term volatility and outflows persist, the long-term outlook remains optimistic for Bitcoin and Ethereum, given their strong price supports and fundamental growth.

Additionally, the fact that 13 of the top 25 ETFs launched in 2024 are related to either Bitcoin or Ethereum underscores their growing prominence and acceptance as mainstream investment assets. Such performance, as highlighted by Nate Geraci, points to the strength and influence these digital assets hold in the broader financial markets. 

It also shows that while current market conditions may not favor crypto ETFs due to macroeconomic and geopolitical factors, the demand and interest in these assets are likely to persist, positioning them well for a rebound once external pressures ease.

The ongoing outflows may lead to further short-term price fluctuations for both Bitcoin and Ethereum, potentially creating opportunities for strategic investors looking to enter the market at lower prices. 

However, given the strong cost basis support and continued interest in crypto ETFs, any downward pressure may be temporary. The increased presence of ETFs linked to Bitcoin and Ethereum in the top performers list for 2024 demonstrates a resilient market demand that could contribute to a quicker recovery once global uncertainties stabilize.

Furthermore, the increasing institutional adoption of cryptocurrency ETFs hints at a growing maturity in the market, providing these digital assets with more stability over time. While in the near term, the pressure on Bitcoin and Ethereum prices might persist due to outflows and geopolitical concerns, the broader trend indicates that once conditions improve, both assets have the potential for a substantial recovery, driven by renewed investor confidence and stronger market fundamentals.