Bitcoin's sharp decline over the weekend likely pushed investors' overall position in the most important spot Bitcoin exchange-traded fund (ETF) into negative territory, underscoring the severity of the recent downturn.
The average dollar invested in BlackRock's iShares Bitcoin Trust (IBIT) is now underwater as of Friday's close, in response to Bob Elliott, chief investment officer at asset manager Unlimited Funds. The shift coincided with a pointy decline in the value of Bitcoin (BTC), which slipped into the mid-$70,000 range.
Source: Bob Elliott
Elliott released a chart showing aggregate, dollar-weighted investor returns, showing that cumulative gains slipped barely into negative territory starting in late January.
The data suggests that while early IBIT investors are still making profits, stronger inflows at higher prices have caused dollar-weighted total returns to fall below zero. In fact, the cumulative gains because the fund's inception have now been worn out on a dollar-weighted basis.
In comparison, IBIT's dollar-weighted returns peaked at around $35 billion in October, when Bitcoin was trading at record highs.
IBIT is certainly one of BlackRock's most successful ETF launches and the fastest fund to achieve $70 billion in assets under management. In October, reports showed that IBIT generated about $25 million more in fees than the asset manager's second-most profitable ETF.
Independent data from Yahoo Finance shows that IBIT's net asset value has fallen in recent weeks, consistent with the broader Bitcoin sell-off. The decline helps explain why aggregate dollar-weighted investor returns have slipped into negative territory.
Bitcoin ETF outflows are increasing
The deterioration in dollar-weighted returns for Bitcoin ETFs coincides with a broader pullback from crypto investment products as investors reduce exposure amid falling prices.
In the week ending Jan. 25, digital asset investment products saw outflows of nearly $1.1 billion from Bitcoin funds alone, while total outflows from crypto funds reached $1.73 billion — the most important weekly outflow since mid-November, in response to CoinShares. The outflows were heavily concentrated within the United States.
“Dwindling expectations of rate of interest cuts, negative price dynamics and disappointment that digital assets haven’t yet participated in devaluation trading have likely fueled these outflows,” CoinShares said.
Weekly money outflows as reported on January twenty sixth. Source: CoinShares
“Devaluation trading” refers to positioning in assets which might be expected to keep up their value despite inflation and currency dilution. Bitcoin was widely seen as a candidate for this role on account of its fixed supply and monetary design.
However, it has not yet attracted these flows to the identical extent as gold. Despite a recent decline, gold has been on a sustained upward trend for greater than a yr, recently hitting record highs of over $5,400 per troy ounce.
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph's editorial guidelines and goals to supply accurate and up-to-date information. Readers are advised to independently confirm the data. Read our editorial policies https://cointelegraph.com/editorial-policy
