Bitcoin ETFs See $342.25 Million Outflow Amid Price Slump

US Bitcoin ETFs experienced a notable shift in investor sentiment, with a significant outflow of $342.25 million on July 1. This marked the end of a 15-day inflow streak, during which these ETFs had been consistently attracting capital. The sudden reversal in investor behavior coincided with a bearish momentum in the Bitcoin price, which had been slipping below key support levels. This outflow was particularly pronounced in the Fidelity Wise Origin Bitcoin Fund, which registered net outflows of $93 million, contributing to the overall bearish sentiment.

The 15-day inflow streak had been a period of sustained interest from institutional investors, with spot BTC ETFs recording inflows of $102.14 million on June 30. This streak had begun on June 9, indicating a period of optimism and confidence in the Bitcoin market. However, the recent outflow suggests a shift in investor sentiment, possibly due to concerns over market volatility or broader economic uncertainties.

The bearish momentum in the Bitcoin price has been a significant factor in the recent outflow from US Bitcoin ETFs. The price of Bitcoin had been on an upward trajectory, but recent movements have seen it slip below key support levels, leading to a more cautious stance among investors. This bearish momentum has been reflected in the net outflows from Bitcoin ETFs, as investors adopt a more risk-averse approach.

The end of the 15-day inflow streak and the subsequent outflow from US Bitcoin ETFs highlight the sensitivity of institutional investors to market conditions. The recent bearish momentum in the Bitcoin price has led to a shift in sentiment, with investors adopting a more cautious stance. This shift in sentiment is reflected in the net outflows from Bitcoin ETFs, as investors seek to protect their capital in the face of market volatility. The recent outflow from US Bitcoin ETFs serves as a reminder of the importance of market conditions in shaping investor sentiment and behavior.

In contrast, spot Ethereum ETFs recorded a third consecutive day of net inflows. On Tuesday, ETH-focused funds collectively attracted $40.68 million. The majority of these inflows came from BlackRock’s ETHA, which posted $54.84 million in net additions, and Grayscale’s ETHE, which added $9.96 million. These gains were partially offset by $24.11 million in outflows from Fidelity’s FETH.

The sharp reversal in Bitcoin ETF flows coincided with the passage of a sweeping $3.3 trillion spending package by the U.S. Senate. Despite lobbying from pro-crypto lawmakers, the legislation did not include any specific provisions related to Bitcoin, crypto mining, or staking, disappointing portions of the digital asset industry. The absence of crypto-related language in the legislation, despite initial optimism, may have contributed to the profit-taking seen across Bitcoin-related funds.

The broader cryptocurrency market reacted by dropping nearly 2.3% to an intraday low of $3.36 trillion. Bitcoin (BTC) dropped close to 2% to a session low near $105,000. This indicates that bullish traders either closed or were forced out of their positions, likely securing profits or limiting downside exposure, while bearish positioning remained intact.

Historically, the third quarter has underperformed relative to other periods, as noted by analysts. Since 2013, Bitcoin has averaged just a 5.47% gain in Q3, making it the weakest of the four quarters in terms of historical returns. This trend may be contributing to the cautious repositioning among investors. When writing, Bitcoin had shed some of its intraday losses and was back above $107k, up nearly 40% from its year-to-date low of $76,300 seen in early April.