CoinShares’ latest weekly report revealed that crypto-related investment products saw their fourth consecutive week of negative flows, dominated by the “measurable outflows from the newly issued ETFs in the US.”

According to the report, the market saw an outflow totaling $251 million, with the Newborn Nine spot Bitcoin ETFs accounting for over 60%, or $156 million, of these flows.

James Butterfill, CoinShares head of research, said:

“We estimate the average purchase price of these ETFs since launch to be $62,200 per bitcoin, as the price fell 10% below that level, it may have triggered automatic sell orders.”

A breakdown of the flows showed that Fidelity’s FBTC saw the highest outflow amount, with $131 million exiting the fund, followed by Ark 21 Shares’ ARKB, which saw outflows amounting to $84 million.

Meanwhile, BlackRock’s IBIT saw a modest negative flow of $24 million, while Grayscale’s Bitcoin ETF continued its outflow trend, with $277 million withdrawn during the period.

The performance of these ETFs pushed outflows from the United States to $504 million. Notably, Canada, Switzerland, and Germany also saw outflows totaling $9.6 million, $9.8 million, and $7.3 million, respectively.

However, despite the performance of US-based spot Bitcoin ETFs, the newly launched spot-based Bitcoin and Ethereum ETFs in Hong Kong saw $307 million in inflows during the first week of their trading.

Ethereum and Polkadot draw inflows

Across assets, Bitcoin saw outflows totaling $284 million, propelling its month-to-date outflow to $291 million.

CryptoSlate’s previous reports found that crypto investors increasingly sought exposure to altcoins while reducing their exposure to flagship digital currencies like Bitcoin.

This trend continued this week as altcoins like Avalanche, Cardano, and Polkadot saw modest inflows of approximately $0.5 million, $0.4 million, and $0.3 million, respectively.

Notably, Ethereum broke its 7-week spell of negative flows, seeing $30 million of inflows last week. This has reduced ETH’s year-to-date outflow to a negative of $20 million.

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Investor interest in spot Bitcoin exchange-traded funds (ETFs) appears to be waning, with outflows totaling $218 million in the past day.

According to data from Farside Investors, BlackRock’s IBIT Bitcoin ETF experienced its second consecutive day of zero flows, while Fidelity’s FBTC saw its first daily net outflow, totaling $23 million.

Other US Bitcoin funds experienced notable daily outflows. Grayscale GBTC fund continued its outflow trend, losing $139.37 million, while $31.34 million exited Ark Invest and 21Shares’ ARKB fund. Additionally, Valkyrie’s fund experienced $20.16 million in outflows, and Bitwise saw a negative flow of $6 million.

In contrast, Franklin Templeton’s EZBC emerged as the only fund with daily net inflows, attracting $1.87 million.

Despite these significant outflows, net inflows into the ETFs have surpassed $12 billion since their launch in January.

Why are Bitcoin ETFs seeing outflows?

Earlier in the week, James Butterfill, CoinShares’ Head of Research, explained that these outflows signal waning interest among ETP/ETF investors, fueled by speculations about potential delays in rate cuts by the Federal Reserve.

Meanwhile, some market experts noted that the slowdown was necessary for the market to take a breather. Bloomberg Senior ETF analyst Eric Balchunas reported that Fidelity’s FBTC and BlackRock’s IBIT had broken records for the highest net assets within the first 72 days of launch.

He said:

“The league of own-ness of IBIT, FBTC et al shows how overheated it all was, a breather was overdue to be honest.”

Fidelity FBTC and BlackRock IBIT are particularly noteworthy as they are market leaders, collectively managing over $27 billion in assets.

However, there’s anticipation surrounding Morgan Stanley’s reported plan to allow its 15,000 brokers to recommend spot Bitcoin ETFs to clients, which could potentially reignite interest in the market.

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The financial behemoth had initially greenlit BTC ETF purchases following approval earlier this year. However, these transactions were strictly initiated by customers, necessitating them to proactively engage with their advisors to delve into this asset class.

Now, the institution is contemplating a shift to allow its brokers to actively promote BTC ETFs, potentially amplifying demand for these investment vehicles. However, such a move also comes with added exposure to legal ramifications.

Meanwhile, the Wall Street giant is working on establishing clear guidelines, or “guardrails,” for solicited purchases. These guidelines may include risk tolerance assessments and allocation and trading frequency limits.

An unnamed Morgan Stanley executive reportedly said:

“We’re going to make sure that we’re very careful about it…we are going to make sure everybody has access to it. We just want to do it in a controlled way.”

The executives did not provide a specific timeline for when the bank would finalize its policy review.

Bitcoin ETFs