The recent stagnation in Bitcoin ETF inflows reflects a cooling trend in the cryptocurrency market
This week marked a notable shift in the momentum of two of the most remarkable exchange-traded fund (ETF) launches in history. BlackRock's IBIT, a Bitcoin ETF, and Fidelity's FBTC witnessed a decline in investor interest, signaling a departure from their previous streak of success. IBIT, which had been dominating the "cointucky derby," experienced zero inflows on Wednesday and Thursday, putting an end to its impressive 71-day streak of continuous investments. Since its approval for trading on January 11, IBIT had amassed approximately $17.24 billion in assets under management.
Similarly, Fidelity's FBTC, the current runner-up in the ETF race, reported its first outflow of $22.6 million on Thursday, leading to a decrease in its assets under management to around $9.9 billion. These developments reflect a waning interest in the leading Bitcoin ETFs, excluding Grayscale's GBTC, and indicate a cooling trend in the cryptocurrency market over the past month. Bitcoin, currently trading at around $63,500, has experienced a decline of about 12% from its all-time high of $73,000 in March.
The decline in interest can be attributed partially to disappointing inflation data, which has diminished hopes for Federal Reserve interest rate cuts. Higher borrowing costs typically dampen the market's appetite for riskier investments like cryptocurrencies. Additionally, Bitcoin has remained relatively stagnant since early March, partly due to ETF stagnation and anticipation surrounding the network's recent "halving" event on April 19.
Despite the recent slowdown, these funds have been widely regarded as a resounding success, accumulating over $54 billion in assets in just over three months of trading. This success is underscored by recent developments such as Hong Kong's approval of three spot Bitcoin and Ether ETFs, signaling further global adoption. Additionally, issuer Harvest's decision to waive management fees for its funds may spark a fee war similar to the competitive landscape seen in the U.S., where Grayscale has announced a Bitcoin Mini Trust with ultra-low fees of 0.15% in an effort to capture outflows from GBTC, which charges 1.5%.