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Spot Bitcoin exchange-traded funds (ETFs) have recorded their largest outflow since their inception last year, with investors withdrawing over $1 billion within a single day.
This significant drop occurred on Tuesday, marking a notable moment for the 11 SEC-approved Bitcoin ETFs, as detailed in a report by Fortune.
The outflow exceeded the previous record of $672 million set in December, highlighting the growing volatility in the cryptocurrency market amid a broader sell-off that has significantly affected the broader digital asset ecosystem.
Bitcoin Faces Major Sell-Off:
The dramatic sell-off follows a broader trend of decline over a six-day period, during which Bitcoin and the wider crypto sector experienced a loss of more than $2 billion in total assets.
Investors are reacting to a climate of economic uncertainty, exacerbated by recent developments including President Trump’s tariff policy, a major hack of the ByBit exchange, and ongoing controversies surrounding memecoins like LIBRA.
Since the start of the month, the Bitcoin price has plummeted from over $100,000 to below $80,000, reflecting the turbulence affecting the cryptocurrency landscape, all while recording a notable 22% drop in the 30-day time frame.
‘Minor Shift’ In $100 Billion Market
James Seyffart, an ETF analyst at Bloomberg, noted that part of the outflow could be attributed to retail investors opting to lock in profits from the recent bull market.
The analyst suggested that many investors are diversifying their portfolios or reducing their Bitcoin exposure in anticipation of further market challenges.
However, Seyffart also highlighted that large institutional players, such as hedge funds, may be engaging in basis trading—a strategy that capitalizes on discrepancies between the spot price of Bitcoin and the prices of its futures contracts.
While these movements in spot Bitcoin ETFs are significant for the crypto industry, Seyffart emphasized that such fluctuations are not unusual in traditional financial markets.
The analyst pointed out that substantial inflows and outflows are commonplace for many non-crypto exchange-traded funds, stating, “We’re talking about billions of dollars coming out of these ETFs in a rather short period of time. But for now, it’s still par for the course for an ETF category.”
Echoing this sentiment, James Butterfill, head of research at CoinShares, remarked that the $1 billion withdrawal is relatively minor compared to the total $100 billion invested in Bitcoin ETFs. “It’s actually quite small in the grand scheme of things,” Butterfill said. “So it’s not particularly damaging.”
Currently trading at $80,140, BTC has continued its downward trend over the past 24 hours, dropping 7% to its lowest level of the year.
Featured image from DALL-E, chart from TradingView.com
