Investors Pull Billions from Bitcoin ETFs Amid Market Downturn

A significant downturn in the cryptocurrency market has brought an end to the 16-day streak of inflows into US Spot Bitcoin ETFs, highlighting growing investor unease.

BlackRock’s Bitcoin ETF (IBIT) experienced its largest-ever outflow, further amplifying concerns. Fidelity’s FBTC also saw a notable reduction earlier this week, signaling a decline in risk-taking among market participants.

The recent plunge in Bitcoin prices has dampened market sentiment, leading to substantial withdrawals from digital asset funds. US Spot Bitcoin ETFs halted their consistent inflows on December 18, as the market turmoil intensified.

Data from Farside Investors revealed that BlackRock’s IBIT witnessed an unprecedented outflow of $72.7 million on December 20. This followed Fidelity’s FBTC, which saw $208.5 million withdrawn on December 19 — the largest outflow since its launch in January 2024. Total withdrawals from US Spot Bitcoin ETFs reached $671.9 million and $277 million on December 19 and 20, respectively, underscoring the impact of the market’s volatility.

The broader crypto market’s struggles appear to be tied to macroeconomic pressures and dwindling confidence in digital assets as speculative investments. This shift in sentiment has prompted institutional investors to reassess their exposure, resulting in large-scale liquidations. Analysts suggest that while these outflows reflect short-term caution, they could also signal a recalibration of investment strategies ahead of a potentially stabilizing market in 2024.