Bitcoin ETFs Bleed $168 Million Amid Market Shakeup

• Bitcoin ETFs have recorded significant outflows.
• The underperformance is tied to the recent crypto market trends. 
• The crypto market is slowly recovering.

The recent crypto market shakeup triggered a significant asset decline, including Bitcoin, which fell nearly 14% below the $50,000 mark. The dramatic plunge ignited a frenzy across the market, resulting in significant liquidations and concerns of lost recovery hopes.

Adding fuel to the future, the negative sentiment has extended to spot Bitcoin exchange-traded funds.

Bitcoin ETFs Lose Funds

The crypto market crash on Monday, August 5, 2024, triggered a net outflow of $168 million from Bitcoin ETFs . 

According to SoSoValue data , the outflows are concentrated among four issuers. Grayscale’s GBTC led the charge with $69.12 million in outflows, followed closely by the Grayscale mini ETF BTC with $21.81 million. Fidelity’s FBTC was next with $58.04 million recorded in outflows, and ARK 21Shares ARKB with $69 million.

The outflows follow a previous record of $237.4 million on August 2, which was also concentrated among the same issuers: Bitwise’s BITB and VanEck’s HODL. This suggests the continuation of the underperformance that began with the initial market decline.

Despite the trend of underperformance, however, recent developments suggest increasing demand for these investment vehicles.

Morgan Stanley Commits To Bitcoin ETFs

According to recent reports, Morgan Stanley, the bank with $1.5 trillion in assets under management (AuM), is set to recommend Bitcoin ETFs to customers soon.

The investment bank will reportedly allow advisors to solicit clients to purchase shares of spot Bitcoin ETF offerings from BlackRock and Fidelity starting Wednesday, August 7, marking a major shift from its policy of offering these products to customers only on request.

In the initial phase, Morgan Stanley advisors will be able to solicit Bitcoin ETF investments only from clients with net worths of at least $1.5 million while adhering to strict guidelines to ensure investor protection.

Additionally, the bank will monitor clients’ portfolios to ensure they are not overexposed to the asset, though specific exposure limits were not detailed.

On the Flipside

• Ethereum ETFs experienced the opposite, pulling their second-highest inflow day despite the crash.
• Bitcoin ETFs have recently topped $1 billion in trading volume.
• Opinions regarding the recent crash are divided. While some expect the losses to extend further , others are optimistic for an imminent recovery .

Why This Matters

The significant outflow of funds from Bitcoin ETFs highlights the negative shift in investor sentiment, but rising demand could signal a potential recovery.

Find out more about the performance of Bitcoin ETFs:
Bitcoin and Ether ETFs Bleed Millions Amid Wider Market Downturn  

Here’s why these analysts expect Bitcoin to rebound following the crash:
Analysts Insist Bitcoin Crash Is Not as Bad as It Looks