Has the negative impact of the large outflow of ETF funds ended? Bitcoin is expected to rise for the fifth consecutive month

According to cryptocurrency investment company CoinShares, the recent cryptocurrency price crash was caused by the outflow of funds from the Grayscale Bitcoin Trust (GBTC). This may also be the reason for the outflow of funds from digital asset products in Europe and Canada. Fortunately, the outflow of funds from the fund has slowed down, and the inflow of funds from the Fidelity Spot Bitcoin ETF (FTTC) has offset it.

CoinShares explained in a Jan. 28 report that GBTC’s total outflows of $5 billion have contributed to the recent drop in digital currency prices and could trigger further outflows from related products in other regions.

CoinShares data shows that digital asset products in Switzerland and Germany were hit the hardest during the trading week of January 22-26, with outflows of $59.8 million and $31.7 million, respectively. Digital asset products from Brazil were the only major inflows last week, with inflows of $10.3 million. For the whole month, Canadian digital asset products had the largest outflows this month, reaching $209.8 million, followed by German and Swedish products, with $124.5 million and $34.2 million, respectively.

Meanwhile, CoinShares noted that the second full week of trading for U.S. spot Bitcoin ETFs saw an outflow of nearly $500 million. While the nine “new” spot Bitcoin ETFs saw inflows of nearly $1.8 billion, this was not enough to make up for the outflows of more than $2.2 billion in a single week after GBTC was converted to an ETF. However, CoinShares noted that outflows from the fund are beginning to taper off. The latest GBTC outflows were down nearly 25% from the $255 million on January 26, and down 70% from the peak single-day outflow of $641 million on January 22. JPMorgan analysts noted that GBTC outflows have put downward price pressure on Bitcoin, but added that it “should be largely over.”

In addition, it was reported that on January 29, the single-day inflow of funds of Fidelity Spot Bitcoin ETF reached 208 million US dollars, which exceeded the outflow of funds of GBTC except the day of its launch for the first time. At the same time, according to data shared by Bloomberg ETF analyst James Seyffart, the trading volume of the nine new spot Bitcoin ETFs in the United States on January 29 totaled 994.1 million US dollars, almost twice the trading volume of GBTC of 570 million US dollars.

Against this backdrop, Bitcoin is on track for a fifth straight month of gains, which would be the coin’s longest winning streak since the pandemic-fueled rally driven by loose monetary policy. A five-month winning streak would be the longest since the six-month winning streak from October 2020 to March 2021, according to data compiled by Bloomberg. The coin hit an all-time high of nearly $69,000 in November 2021.

Data compiled by Bloomberg show that the 10 spot bitcoin ETFs have attracted a total of $817 million in net funds to date, making them the most successful ETFs in history based on trading and flow metrics.