This week saw a significant change in the momentum of two of the most successful exchange-traded fund launches in history. BlackRock’s (NYSE:BLK) spot Bitcoin ETF, IBIT, known for its outstanding performance, saw no new investments on Wednesday and Thursday, ending its 71-day streak of fresh investments totaling around $17.24 billion in assets under management since it started trading on January 11. Additionally, Fidelity’s FBTC, the second most successful ETF, reported losses of $22.6 million on Thursday, marking its first outflow and reducing its assets under management to approximately $9.9 billion, according to CoinGlass data.
The decreasing interest in the top Bitcoin ETFs, except for Grayscale’s GBTC, is a significant sign of the recent cooling of the cryptocurrency market. This suggests that the initial ETF excitement that drove Bitcoin to new highs has faded. With Bitcoin currently trading around $63,500, down about 12% from its peak of $73,000 in March, only one of the 10 spot Bitcoin ETFs, Franklin Templeton’s EZBC, saw new investments on Thursday.
Weaker inflation data has dampened hopes for Federal Reserve interest rate cuts, and the possibility of higher borrowing costs typically reduces the market’s interest in riskier, more volatile investments like crypto. Bitcoin has remained relatively stable since early March, partly due to ETF stagnation and the anticipation surrounding the recent “halving” event on April 19, as investors followed the “buy the rumor, sell the news” strategy and sold off their holdings.
Nate Geraci, president of the ETF Store, pointed out that ETF flows often reflect the performance of the underlying asset, suggesting that a pause in Bitcoin’s price could lead to a temporary halt in new investments. However, Geraci emphasized that these products are still in the early stages of adoption, with many large institutions yet to allow their brokers to offer spot Bitcoin ETF purchases, and registered investment advisors cautiously entering the market.
Despite the recent slowdown, these funds are considered a major success, amassing over $54 billion in assets in just over three months of trading, integrating Bitcoin-tracked assets into the portfolios of millions of mainstream investors.
Highlighting their success, Hong Kong’s Securities and Futures Commission recently approved three spot Bitcoin and Ether ETFs, set to start trading on Tuesday, with more countries expected to follow suit. Issuer Harvest is waiving a management fee for its funds, sparking expectations of a fee competition similar to the one in the U.S., where Grayscale introduced a Bitcoin Mini Trust with very low fees of 0.15% to attract some of the outflows from GBTC, which charges 1.5%.
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