BlackRock's Bitcoin ETF Sees $231.6M Inflows After Two Days of Record Outflows

BlackRock’s iShares Bitcoin ETF (IBIT) recorded a $231.6 million inflow on February 5, following two days of significant redemptions. This marked the first major inflow since early January, as investors re-entered the fund amid market fluctuations. The inflow was attributed to corporate purchases and investor confidence returning after a period of uncertainty.

The firm’s net digital asset exposure has dropped from $78.36 billion on January 1 to $68.06 billion by February 4. Bitcoin (BTC) and Ethereum (ETH) accounted for the majority of the outflows, totaling $7.79 billion and $2.51 billion respectively. The decline was attributed to falling crypto prices and reduced institutional holdings.

Bitcoin prices fell 11.1% while Ethereum dropped 21.22% in the same period. This decline in market value contributed to the net negative change in BlackRock’s crypto exposure. However, the firm reported a partial recovery on February 3, with its Bitcoin exposure rising by $775 million and Ethereum exposure increasing by $100 million.

Why Did This Happen?

The outflows were driven by broader market weakness and volatility. In early February, Bitcoin ETFs recorded $545 million in outflows, pushing weekly flows into negative territory. This trend mirrored a larger decline in the overall crypto market, with a 20% drop in total market capitalization since January 1. Despite this, ETFs have still attracted $3.5 billion in inflows year-to-date.

BlackRock’s outflows were particularly pronounced on February 2, when it reported $496 million in Bitcoin redemptions and $138 million in Ethereum redemptions. This accounted for 78% of the total U.S. Bitcoin spot ETF outflows and over 53% of Ethereum redemptions that day. The firm’s holdings also saw direct reductions in token balances, with a drop of 2,930 BTC and 138,240 ETH.

How Did Markets Respond?

Investors responded to the ETF flows by reassessing their allocations. BlackRock’s ETF inflow on February 5 marked a reversal of recent outflows and signaled renewed institutional interest. The inflow was the highest since mid-January, breaking a streak of outflows. Strategy (MSTR) also contributed to the recovery, purchasing 855 BTC on February 5.

The broader market was influenced by geopolitical easing between the U.S. and Iran, which slightly boosted investor confidence. This led to a modest rise in Bitcoin, which closed at $78,000 on February 6. However, the overall bearish trend remained intact, with the RSI reading at 29 on the daily chart and the MACD indicator remaining bearish according to technical analysis.

What Are Analysts Watching Next?

Analysts are closely monitoring whether the inflow will be sustained or if the market will continue its bearish trajectory. James Seyffart of Bloomberg noted that the ETFs are still only 13% below their October 2025 peak, indicating that the outflows have not yet caused a major reset according to Bloomberg analysis.

Eric Balchunas observed that only about 6% of total ETF assets have been redeemed, despite the sharp drop in Bitcoin prices. This suggests that most investors are still holding their positions, even as prices fall below key support levels. Balchunas also highlighted that BlackRock’s iShares Bitcoin ETF (IBIT) has dropped from its peak of $100 billion in assets to $60 billion.

Market participants are also watching for regulatory developments, particularly the CLARITY Act, which could influence investor sentiment and ETF flows. The act, if passed, may provide a near-term catalyst for the market. However, recent odds of passage have decreased, and any positive momentum is expected to benefit altcoins more than Bitcoin.

The ETF activity also reflects broader institutional behavior. Large financial firms, including Fidelity and Ripple, are expanding their crypto infrastructure, launching stablecoins and derivatives to provide more regulated exposure. Fidelity's FIDD stablecoin and Bitnomial's regulated futures contracts are examples of these developments.