BlackRock’s IBIT Records First Net Outflows Since May Amid Market Struggles

BlackRock’s IBIT Records First Net Outflows Since May Amid Market Struggles

U.S. spot Bitcoin exchange-traded funds (ETFs) experienced significant net outflows on Thursday, with a total of $71.73 million being withdrawn, marking the third straight day of declines. Among these, BlackRock’s IBIT, the largest spot Bitcoin ETF by net assets, recorded its first net outflows since May 1, losing $13.51 million, according to data from SoSoValue.

Other prominent Bitcoin ETFs also saw substantial outflows. Grayscale’s GBTC faced withdrawals of $22.68 million, while Fidelity’s FBTC registered $31.11 million in outflows. Bitwise’s BITB and Valkyrie’s BRRR reported outflows of $8.09 million and $1.68 million, respectively.

ARKB Sees Positive Inflows Amid Overall Decline

In contrast to the overall negative trend, Ark and 21Shares’ ARKB ETF managed to secure net inflows of $5.34 million, standing out as the only fund in the green. However, trading volumes for the 12 spot Bitcoin ETFs declined sharply, falling to $1.64 billion on Thursday from $2.18 billion the previous day.

Spot Ethereum ETFs Follow the Downward Trend

Spot Ethereum ETFs mirrored the negative sentiment, with net outflows of $1.77 million on Thursday following a brief period of inflows. The Grayscale Ethereum Trust (ETHE) led these outflows with $5.35 million, though this was partially offset by $3.57 million in net inflows into the Grayscale Ethereum Mini Trust (ETH). The remaining seven Ethereum funds saw no movement.

Overall trading volume for the nine spot Ethereum ETFs dropped significantly, from $151.57 million on Wednesday to $95.91 million on Thursday. This comes after Ethereum ETFs experienced their first net inflow of $5.8 million on Wednesday, breaking a streak of nine consecutive days of net outflows.

Challenges Facing Ether ETFs Since Launch

Ether spot ETFs have struggled since their U.S. launch last month, consistently facing net outflows, as highlighted in a recent JPMorgan research report. In the first five weeks post-launch, Ether ETFs saw around $500 million in net outflows, a stark contrast to the over $5 billion in inflows for Bitcoin ETFs during the same period.

JPMorgan analysts attributed the weak performance of Ether ETFs to Bitcoin’s “first mover advantage,” the lack of staking options, and lower liquidity, which made Ether ETFs less appealing to institutional investors. Surprisingly, Grayscale’s Ethereum Trust (ETHE) saw $2.5 billion in outflows, far exceeding the $1 billion outflow expected during its transition from a closed-end fund to a spot ETF.

To combat these losses, Grayscale introduced a mini Ether ETF, though it only attracted $200 million in inflows. JPMorgan’s analysis suggests that the disparity in demand between Ether and Bitcoin ETFs is driving increased interest in a combined ETF offering exposure to both assets. Despite the challenges, institutional and retail ownership of spot Bitcoin ETFs has remained relatively stable since the first quarter, with retail investors holding about 80%.

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