Originally published on: August 06, 2024
Investors in the iShares Bitcoin exchange-traded fund (ETF) faced a major shock as the market opened on Aug. 5. The ETF, managed by iShares (IBIT), saw a 14% drop after already experiencing an 8% decline the previous week.
Despite this significant decrease in value, there were no inflows into the ETF, indicating that investors held firm in their positions. Senior Bloomberg ETF analyst Eric Balchunas praised these investors for their steadfastness, likening them to the “Rock of Gibraltar.”
While there were total outflows of $168 million from ETFs, this only accounted for 0.3% of the total assets under management (AUM). The majority of these outflows were from the Grayscale Bitcoin Trust (GBTC).
Balchunas suggested that there could be more outflows in the coming week, estimating that billions of dollars could leave the market, possibly up to $5 billion.
The significant outflows from the ETF market have led to the Crypto Fear & Greed Index entering the “extreme fear” zone for the first time in two years.
Despite the market turmoil, Bitcoin experienced a sharp decline, dropping to $49,500 on Aug. 5. Long-term Bitcoin holders sold approximately $600,000 of the cryptocurrency during this crash.
However, amid these fluctuations, both Bitcoin and Ether ETFs recorded almost $6 billion in trading volume on Aug. 5.
In contrast to the Bitcoin ETF, Ether ETFs remained “unfazed,” as noted by Balchunas. Equity ETFs, on the other hand, saw increased cash inflows compared to normal, indicating a strong response to the market volatility.
Stay updated with the latest market trends and investment opportunities by subscribing to the Markets Outlook newsletter for critical insights every Monday. Join now and gain valuable insights to refine your trading strategies.