In bitcoin crash, ETF flows are down, but don’t signal investor panic

of Bitcoin The massive decline from the record price of over $126,000 last October has darkened sentiment in the crypto world. Faith in the trade has been shaken as it is seen as a digital rival to gold as a store of value and a risky asset that will continue to grow with the crypto-friendly Trump administration.

Since its all-time high price last October, Bitcoin has lost almost half of its value and its failure to recover in trading is raising fears about another “crypto winter”; This is a prolonged decline similar to the FTX crash of 2022, when Bitcoin fell from $50,000 to $15,000. In the last month alone, Bitcoin has fallen over 25%.

But crypto investment experts on CNBC’s latest “ETF Edge” report say a look at recent flows into and out of Bitcoin and crypto exchange-traded funds shows that long-term investors are not abandoning the asset class. They say money is definitely going out, but not at a level that would cause long-term investor panic.

Over the past three months, iShares Bitcoin Trust (IBIT) A net outflow of approximately 2.8 billion dollars was seen. That’s pretty significant, but about $21 billion in net inflows were drawn into the BlackRock ETF last year, according to VettaFi.

The broader spot Bitcoin ETF category shows a similar pattern. There has been a net outflow of approximately $5.8 billion in the ETF asset class over the past three months. But last year, spot bitcoin ETFs generated net inflows of approximately $14.2 billion. Money is coming out but the majority of assets remain in place and some say the money being withdrawn is not from the long-term investor or financial advisor who began allocating assets to crypto.

“It’s not ETF investors who are driving the sell-off,” said Bitwise Asset Management CIO Matt Hougan on “ETF Edge.”

He says much of the broader pressure on Bitcoin could come from crypto investors who have accumulated positions over many years and are now reducing their exposure. “This is really a tale of two sides,” Hougan said. There are hedge funds and short-term investors who use the most liquid ETFs as vehicles and can quickly withdraw capital when momentum turns negative.

At CNBC’s Digital Finance Forum last week, Galaxy CEO Mike Novogratz said the crypto market’s “era of speculation” may be over and future returns will be more like a long-term investment holding. “These will be much lower-yielding real-world assets,” he said at a CNBC event in New York City last Tuesday. “Retailers aren’t getting into crypto because they want to make 11% annually,” he said. “They come in because they want to win 30 to one, eight to one, 10 to one.”

Financial advisors at Wall Street banks are among those adding bitcoin to investor portfolios and adding their own branded crypto ETFs. Hougan said long-term investors who hold cryptocurrencies as a small share in different portfolios may be eager to ride out the volatility. If investors had generally capitulated, outflows over the last three months would likely have approached the scale of inflows over the previous 12 months.

It’s not like ETF asset flow analysis makes it easy for a new crypto investor to stomach it. “It’s hard to be a Bitcoin investor right now,” Will Rhind, founder and CEO of ETF company GraniteShares, said on “ETF Edge.” He added that the performance of other “fixed” assets was as follows: goldBitcoin has increased its distress. For investors who supported the “digital gold” concept, the Bitcoin price collapse was disturbing. “This wasn’t supposed to happen,” he said of a period when other safe-haven assets performed strongly and Bitcoin continued to fall. “Gold shouldn’t be hitting all-time highs,” he said, as Bitcoin fell nearly 50%.

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