A key tailwind that reportedly drove bitcoin’s recent surge above $80,000 appears to be waning.
The 11 US-listed spot bitcoin exchange-traded funds (ETFs), which pulled in $3.29 billion in investor money through March and April, are now leaking funds. And big ones at that.
On Wednesday, investors pulled $635 million from those funds, the highest one-day net outflow since Jan. 29, according to data source SoSoValue. Nor was it an isolated event. Over the past five trading days, the ETFs have bled a total of $1.26 billion, pulling total net inflows since their January 2024 debut down to $58.5 billion from $59.76 billion a week ago.
Bitcoin has stopped rallying. Since last Wednesday, the rally that took prices from $65,000 to above $80,000 has stalled, with momentum running out near the 200-day simple moving average located just above $82,000. In the past 24 hours, bitcoin has fallen over 2% to $79,400, with analysts attributing the loss to resurgent inflation fears in the US, although this macro development has largely been shouldered by Wall Street’s Nasdaq and the S&P 500 stock index. Both of these indices hit new highs on Wednesday.
The $635 million outflow is not a figure that bulls can easily dismiss, especially as the strong inflows through March and April were widely hailed as bullish catalysts and the macro picture worsens due to rising US inflation
“A persistently warm CPI, an incoming Fed under Warsh that markets read as more hawkish, or another oil shock could compress bitcoin even with positive net flows. From our perspective, the more useful question is not whether the markup leg will continue, but whether macro conditions will remain loose enough for the flows to do their job,” said Adam Haeems, head of asset management at Tesseract Group. Tesseract has over $500 in assets under management.
Still, it’s worth noting that the relationship between ETF flows and bitcoin is not as straightforward as it once was. A correlational study offers a more data-driven lens on that.
The 90-day rolling Pearson coefficient between bitcoin’s daily percentage return and the daily percentage change in cumulative net ETF inflows is currently just 0.16, statistically indistinguishable from zero and down from a peak of 0.68 in February.
In short, knowing the direction in which the ETF flows moved on a given day may not provide any clues as to BTC’s price action. That said, big redemptions like the one seen on Wednesday still matter.
