Institutions rushing to pull out of Bitcoin ETFs

Korea Economic Daily

Summary

This month it reported the largest-ever net outflow of about KRW 5.4 trillion from spot Bitcoin ETFs.
Experts said the U.S. policy rate decision is the key variable that will determine the direction of Bitcoin prices.
The market currently favors a rate cut next month, and if a cut occurs there is a possibility of a rebound in risk assets such as Bitcoin.

This month KRW 5.4 trillion net outflow, largest on record

Next month's U.S. policy rate decision is a variable

Cathie Wood "If cut, rebound possible"

So far this month, the amount withdrawn from spot Bitcoin exchange-traded funds (ETFs) has reached the largest scale on record.

According to ETF.com, the net outflow from 11 spot Bitcoin ETFs listed on U.S. exchanges from the 1st to the 24th of this month totaled $3,687,900,000 (about 5.3928 trillion won). This exceeded the net outflow of $3,560,400,000 in February, when Bitcoin plunged 22.5%. Among spot Bitcoin ETFs, the largest by net assets, the "iShares Bitcoin Trust" (IBIT), saw $2,350,000,000 withdrawn. Large sums also flowed out of the "Fidelity Wise Origin Bitcoin" (FBTC·-654,940,000) and the "ARK 21Shares Bitcoin" (ARKB·-231,580,000).

Spot Bitcoin ETFs have led the Bitcoin rally since they were listed on the New York Stock Exchange in January last year. The main demand has come from institutions and corporations. The industry view is that these buyers accumulated ETFs, which pushed up Bitcoin prices and increased investment returns.

Recent sharp declines in Bitcoin prices have also been attributed to institutions' large-scale selling of ETFs. Marcus Tillen, CEO of crypto analytics firm 10x Research, said, "Large-scale outflows from spot Bitcoin ETFs mean institutions have stopped injecting new money into Bitcoin."

Citi Research analyzed the correlation between ETF flows and Bitcoin prices and found that every $1 billion outflow corresponded to a 3.4% drop in price.

Experts forecast that next month's U.S. Federal Reserve rate decision will determine Bitcoin's direction. If rates are cut, market liquidity could increase and risk-asset sentiment could recover. Greg Cipolaro, Global Head of Research at New York Digital Investment Group, said, "Bitcoin has become a gauge of global liquidity that reacts first to rate changes and capital flows."

The market currently favors a rate cut next month. According to the CME FedWatch, the probability of a 0.25% point cut is now 85%. Cathie Wood, CEO of ARK Invest, predicted, "(After a rate cut) cryptocurrencies and AI-related stocks could rebound."

Reporter Maeng Jin-gyu maeng@hankyung.com

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