According to data from Farside Investors, the Fidelity Bitcoin ETF has reported an outflow of $113.6 million. This marks one of the most notable withdrawals from any cryptocurrency ETF this year.
This withdrawal signals a shift in investor sentiment regarding Bitcoin-related investment products, potentially triggered by broader market volatility and strategic adjustments by institutional investors. These outflows put Bitcoin (BTC) ETFs in a month of heavy inflows and outflows, reflecting increased volatility in the broader market since the turn of the year.
The crypto asset’s price gains and trading activity are responsible for these outflows. Investors could also be readjusting their portfolio strategies — reducing their Bitcoin ETF exposure or rearranging their portfolio to include other assets, including digital currencies.
Implications of Fidelity Bitcoin ETF Outflows
The $113.6 million withdrawal is a significant chunk of the ETF’s total assets under management, which raises several questions about short-term confidence in Bitcoin’s performance. Meanwhile, on-chain metrics have also shown an increase in Bitcoin exchange deposits, which suggests a rise in selling pressure.
This development proves investors have become cautious as uncertainty looms in the financial markets. Many investors are also selling their positions, a factor reflected in the rise in trading volumes during Asian market hours.
The RSI is approaching the oversold line. If reached, it could start a rebound in prices, provided bullish macroeconomic conditions hold. According to analysts, further ETF outflows would further strengthen the change in investor sentiment in this market.
Bitcoin ETFs’ Performance
Meanwhile, US-based spot BTC ETFs have recorded their third successive day of outflows. The twelve spot BTC ETFs recorded a combined net outflow of $284 million on January 13 alone.
While Fidelity Bitcoin ETF recorded the largest outflows, ARK 21Shares’ ARKB noted outflows of $92.36 million. Grayscale’s GBTC noted outflows of $89.01 million, while Bitwise’s BITB recorded outflows of $18.64 million.
In contrast, BlackRock’s IBIT was the only ETF to record an inflow of $29.46 million, while all the other ETFs were flat. Accordingly, trading volumes across the 12 ETFs reached $3.17 billion on January 13, declining from the prior day’s $3.26 billion.
Market Drivers
The recent volatility in Bitcoin ETFs can be linked to macroeconomic factors. Stronger-than-expected payroll data triggered a spike in bond yields, increasing pressure on risk assets, including cryptocurrencies.
In addition, possible positive macroeconomic conditions under the incoming US administration have boosted the dollar’s strength, further affecting Bitcoin’s price. At the time of writing, Bitcoin is back above $95,000, with analysts optimistic that the leading crypto asset will surge toward $100,000 within the next few weeks. However, they also predict that a break below $90,000 could cause BTC’s price to trade around $80,000.
Like Bitcoin ETFs, Ethereum (ETH) ETFs have recorded negative net flows, with nine funds posting a fourth consecutive day of outflows on January 13. Grayscale’s Ethereum Mini Trust led the outflows with $37.84 million, while BlackRock’s ETHA recorded $12.9 million in inflows, offsetting some of the outflows.
According to CoinGecko data, ETH trades at $3,175 at the time of writing.
BlackRock Expands Bitcoin ETF Offerings into Canada
Meanwhile, BlackRock’s iShares Bitcoin ETF has launched in Canada. It would be known as the iShares Fund and traded under the tickers IBIT and IBIT.U, respectively, for the Canadian and US markets.
The iShares Fund primarily invests in the iShares Bitcoin Trust ETF in the US, offering tax-advantaged opportunities through traditional brokerage platforms. BlackRock’s entry adds credibility to Canada’s crypto market, joining seven other iShares listings on Cboe Canada.
The increased adoption of Bitcoin ETFs reflects a demographic shift, with younger investors flocking to digital assets as inflation rises. In its official statement, BlackRock remarked that crypto adoption had eclipsed the historical performances of technological trends, going from niche to mass market in 12 years.
By comparison, the internet took 15 years to achieve the same milestone.
