Following a dramatic 10% drop in the price of Bitcoin, which momentarily settled below $50,000 before recovering to about $54,000, Bitcoin exchange-traded funds (ETFs) suffered large outflows on Tuesday, totaling almost $168 million. This is the second straight day of significant withdrawals, resulting in $405 million in weekly total outflows.
Each losing around $69 million, Grayscale’s Bitcoin Trust (GBTC) and ARK Invest’s ARK Invest drew the most withdrawals. Fidelity’s FBTC followed with $58 million outflows, or six straight days of withdrawals for this fund. By contrast, Ethereum ETFs saw around $49 million in inflows on the same day, suggesting a change in investor mood.
Broader Market Turbulence Contributes To Volatility
The withdrawals matched more general market volatility driven by geopolitical concerns and unsatisfactory US economic data, hence adding to the volatility in crypto markets. With Bitcoin ETFs accounting for more than $5 billion of the entire trading volume for Ethereum ETFs, which reflects increased trading activity during the market slump, the overall trading volume for both cryptocurrencies reached almost $6 billion.
Ethereum Outperforms Bitcoin As Investors Seek Alternatives
Although Bitcoin ETFs had significant withdrawals, Ethereum ETFs showed about $49 million in inflows that same day, suggesting a change in investor mood. This pattern implies that some investors could be spreading their portfolios across alternative cryptocurrencies like Ethereum, which has proven its resistance against market volatility.
According to the most recent figures, Ethereum gained over 6% while Bitcoin’s price has likewise showed some rebound, trading at over $56,000. The notable withdrawals from Bitcoin ETFs, as fund managers sold Bitcoin to satisfy redemption demands, most likely caused the little slide under $51,000.
The times of the withdrawals from Bitcoin ETFs coincide with difficulties in the larger crypto market. Rising volatility driven by geopolitical tensions and economic uncertainties has investors looking for safer havens or diversifying into other cryptocurrencies like Ethereum. But the price rebound in Bitcoin and the ongoing inflows into Ethereum ETFs point to a possibly stabilizing state of the market.
Investors and experts both will be keenly observing Bitcoin and Ethereum ETF performance as the crypto sector develops. One important measure of the general state and attitude in the crypto market will be the capacity of these funds to draw in and keep money.
Featured image from Pexels, chart from TradingView