BlackRock's Bitcoin ETF Faces Headwinds Amid Stock Market Correlation

BlackRock's Bitcoin ETF, iShares Bitcoin Trust (IBIT), has faced headwinds due to its correlation with the stock market, according to Bloomberg's senior ETF analyst, Eric Balchunas. Despite its strong performance since its launch last year, reaching $50 billion in assets under management, the ETF's growth may be hindered by Bitcoin's tendency to decline when stocks fall.

Balchunas noted that while IBIT has attracted significant investment, including a $436 million investment from Abu Dhabi's Mubadala Sovereign Wealth Fund, its correlation with stocks presents a challenge for its continued growth. He suggested that a break in this correlation would be necessary for the ETF to gain more significant adoption.

Institutional adoption of Bitcoin ETFs has seen remarkable growth, with assets under management tripling in Q4 2024 to reach $38 billion. However, recent data shows a slowdown in momentum in 2025. Bitcoin ETFs experienced their first week of net outflows in early February, with a total net outflow of over $585 million. This trend has continued, with $129 million in outflows reported on February 18.

Analysts attribute this slowdown to investor caution following Jerome Powell's rejection of rate cuts and ongoing concerns over high inflation. Despite these challenges, BlackRock's Bitcoin ETF remains the largest, holding 2.98% of the total Bitcoin supply. As the market evolves, investors will continue to monitor the performance of Bitcoin ETFs and their correlation with other asset classes.