Bitcoin (BTC) and its US ETF have both fallen over the past eight weeks, but ETF outflows have compounded the losses.
After peaking at $168 billion on October 7th, the top 12 Bitcoin ETFs traded on US exchanges lost 35% of their assets under management (AUM) through November 19th, an amount much worse than BTC’s 28% decline over the same period.
Of course, investors can place most, but not all, of the blame for that $58 billion loss on BTC itself. From a high of $126,300 on October 7th to a closing price of $91,500 on November 19th, BTC itself fell 28%.
ETF outflows explain these additional 700 basis points, or a 35% decline in AUM versus a 28% decline in BTC. surely, Net flows from BTC ETFs have been negative for 21 of the past 35 business days..
Spot ETF sponsors must maintain shares in the fund, which tracks the price of BTC net of pre-published fees, but their overall assets (with adjustments for number of shares) can rise or fall depending on how investors move assets between BlackRock, Grayscale, Fidelity, or other products.
Using Bitcoin ETF fund flow data, Protos created a graph showing the massive outflows from the US BTC ETF.
Although changes in BTC ETF AUM often lead or lag relative to the price of BTC, the graph shows that the overall loss in AUM far outweighs the impact on the price of BTC itself.
AUM decreased by 35%, while BTC decreased by 28%.
Read more: Community note debunks Bitcoin ETF rehypothesis
Investor, not ETF sponsor, withdraws assets from BTC ETF
To be clear, investors are withdrawing assets from the ETF through sales or redemptions, and these actions are not attributable to the sponsor.
Simply put, many social media users blamed BlackRock itself for selling BTC over the past eight weeks.
In fact, these sales came from thousands of investors who owned BlackRock’s IBIT ETF through hundreds of third-party brokerages and funds. BlackRock has never placed such a sell order.
Similarly, there was widespread misplaced anger at other ETF sponsors such as Grayscale and Bitwise, which apparently were not the cause of the alleged selling pressure on BTC.
Unless another division of the same company is trading corporate funds, most ETF sponsors simply follow their clients’ instructions.
The charts and screenshots attached to these social media posts simply showed customer order results, not corporate transactions.