Bitcoin ETFs See 23% Drop in Inflows as Prices Stall

Spot Bitcoin ETFs have experienced a significant slowdown in inflows during the first week of June, following a strong performance in May. The first trading day of June saw a $267.5 million outflow, which was preceded by a massive $616.1 million outflow on May 30. This trend continued with additional outflows of $278.4 million on June 5 and $47.8 million on June 6, effectively erasing the modest inflows of $71.3 million on June 3 and $375.1 million on June 4.

Grayscale’s GBTC has been a consistent drag on the market, with $278.4 million exiting the fund between June 1 and June 6. In contrast, BlackRock’s IBIT, which has historically dominated inflow charts, contributed only $82.2 million during the same period, reinforcing the overall slowdown in activity.

This drop in activity coincides with Bitcoin’s price hovering tightly in the $104,000 to $106,000 range, failing to break past its May 22 all-time high of $111,653. Flows in May were notably more erratic, peaking at $934.8 million in net inflows on May 22, the day after BlackRock’s IBIT alone drew $877.2 million. However, this bullish momentum quickly faded, with net outflows hitting $346.8 million by May 29, followed by a sharp $661.1 million withdrawal on May 30, marking the largest single-day net outflow since ETFs launched in January. These outflows reflected a market struggling to hold above $109,000 as spot demand thinned.

June flows so far seem to be a result of Bitcoin’s narrow trading range, with prices constrained mainly between $104,000 and $106,000 since the beginning of the month. This supports the theory that ETF demand softens when Bitcoin enters a period of price inertia, even if it’s near its all-time high. With volatility low, ETF investors appear hesitant to increase exposure. That inertia stands in stark contrast to the strong flows observed in mid-May when price action was aggressive and bullish conviction was high.

However, with Bitcoin rallying at the start of this week, should the price continue or hold around $107,000 at the US market open, today could see renewed inflows into spot ETFs. This potential reversal highlights the sensitivity of ETF flows to Bitcoin’s price movements and the importance of market sentiment in driving investment decisions.