Bitcoin ETFs See $1.6B Outflows Amid Trade Tensions, Price Drop

Spot Bitcoin ETFs experienced significant outflows in the first half of March, with a total of over $1.6 billion in net withdrawals. This period saw weekly outflows of $799.39 million and $870.39 million, respectively, marking the fifth consecutive week of net withdrawals. The total outflows over these two weeks amounted to $1.67 billion, erasing over $5.4 billion from these ETFs since the start of the year.

These outflows are attributed to escalating U.S. trade tensions and broader market uncertainty, which have led to a cautious approach from institutional investors. The outflows were primarily from major Bitcoin ETFs, with Fidelity’s FBTC and BlackRock’s IBIT leading the way with $508.4 million and $467.7 million in net outflows, respectively. Grayscale’s GBTC and ARK 21Shares’ ARKB also saw significant withdrawals, losing around $289 million and $231.8 million, respectively.

Other ETFs, including Invesco Galaxy’s BTCO, Franklin Templeton’s EZBC, Bitwise’s BITB, and WisdomTree’s BTCW, experienced moderate outflows ranging from $51 million to $108 million. Valkyrie’s BRRR, Grayscale’s mini Bitcoin Trust, and VanEck’s HODL had minor withdrawals, with outflows staying under $15 million.

The outflows from Bitcoin ETFs are closely linked to Bitcoin’s recent price dip. Over the past month, Bitcoin has dropped 14%, briefly hitting lows of $77,000. This price decline has led to a 21.7% drop in total net assets for Bitcoin spot ETFs, which now stand at $93.25 billion.

Analysts suggest that Bitcoin’s recent drop is due to broader economic worries, particularly concerns over trade tariffs and overall market uncertainty. As a result, traditional assets like gold are gaining traction, with gold ETFs seeing more interest and now overtaking Bitcoin ETFs in total assets under management.

Experts have weighed in on the recent bearish trend in Bitcoin ETFs, noting that Bitcoin’s drop below $80,000 has reinforced its status as a “high-risk asset.” The current environment, characterized by elevated consumer price index (CPI) readings and a hawkish stance from the Federal Reserve, has kept borrowing costs high and reduced liquidity in the market. This dynamic continues to weigh on speculative assets like Bitcoin, which are highly sensitive to shifts in monetary policy.

Trade tensions and overall economic uncertainty are also shaking investor confidence, making further sell-offs more likely. However, there are signs that the recent sell-off may be more of a reaction to past volatility rather than the start of a long-term exit. If the broader market conditions remain favorable, there is potential for a reversal in ETF inflows.

One potential trigger for a market reversal could be the Bitcoin Act, which is drawing widespread attention. However, improved sentiment across all markets may depend on the resolution of the tariff wars.