Bitcoin ETF outflows are increasing again after a turn in the tide last week. These outflows, given the ETFs’ correlation with the Bitcoin price, have a substantial impact on how well the cryptocurrency performs over time. With outflows increasing, will this cause a BTC price crash?
ARK Invest and grayscale lead outflows
While Grayscale’s Spot Bitcoin ETF has been the natural culprit for ETF outflows due to its high fees, another fund has. connected the trend in a surprising twist. Cathie Wood’s ARK Invest saw significant outflows from its ETF, leading to a new record for the investment firm.
The Ark 21Shares Fund (ARKB) saw a record amount of $87.5 million disappear from the fund on Tuesday, April 2. Interestingly, the fund’s outflows were even higher than those of Grayscale, which saw approximately $81.9 million in outflows on the same day.
It was the second consecutive day of outflows for both funds, although this was more worrying for the Ark 21Shares Fund. This is because Grayscale saw a drop in outflows between Monday and Tuesday, from $302.6 million to $81.9 million. While the ARK Invest fund saw outflows rise from $0.3 million on Monday to $87.5 million on Tuesday, resulting in a 29,000% increase in outflows in one day.
However, only these two funds have experienced outflows this week as the other ETFs still see upside potential. While Monday’s net flows came in negative at $85.7 million, Tuesday’s numbers looked better with positive net flows of $40.3 million.
How does this affect the Bitcoin price?
Since the Spot Bitcoin ETFs were approved in January, their impact on the Bitcoin price has been generally positive. However, there have been points where the outflows from the funds have affected the BTC price, causing it to plummet.
A few examples of this can be found in January, a week after the ETFs were first approved. The outflows had ravaged the funds and as a result, the Bitcoin price had fallen. In March, when the outflow turned negative between March 18 and 22, the Bitcoin price collapsed from $73,000 to $61,000.
Considering BTC’s performance during periods when outflows dominate Spot ETFs, this current trend does not bode well for the price. There has been a recovery in BTC price after inflows turned positive on Tuesday. But unless they remain positive until the end of the week, the BTC price could fall further towards the $60,000 level.
BTC price recovers above $66,000 | Source: BTCUSD on Tradingview.com
Featured image from Business News This Week, chart from Tradingview.com
Disclaimer: The article is for educational purposes only. It does not represent NewsBTC’s views on buying, selling or holding investments and of course investing involves risks. You are advised to conduct your own research before making any investment decisions. Use the information on this website entirely at your own risk.