TL;DR
- The Bitcoin ETF managed by iShares (IBIT) had a rough start to the week, dropping 14% at the market opening on August 5, following an 8% decline the previous week. Despite this, traders held their positions firmly.
- Senior Bloomberg ETF analyst Eric Balchunas highlighted that the total outflows for the group of ETFs were $168 million, a mere 0.3% of the total assets under management. He speculated that more outflows could occur, but was surprised by the strength of long-term holders.
- The significant outflows impacted the market, pushing the Crypto Fear & Greed Index into “extreme fear” for the first time in two years. Bitcoin crashed to $49,500, with long-term holders selling $600,000 worth of BTC.
The Bitcoin exchange-traded fund (ETF) managed by iShares (IBIT) experienced a turbulent start to the week, with the asset plummeting by 14% at the market opening on August 5. This decline followed an 8% drop the previous week, leaving traders in shock. Despite the significant downturn, market analysis revealed that traders remained steadfast in their positions.
So $IBIT investors woke up on Monday to a -14% move over wknd after stomaching an 8% decline the week prior and what did they do? ABSOLUTELY NOTHING. $0 flows. Compared to some of these degens these boomers are like the Rock of Gibraltar. You guys are so lucky to have them. pic.twitter.com/Qqg9Y2E40k
— Eric Balchunas (@EricBalchunas) August 6, 2024
Senior Bloomberg ETF analyst Eric Balchunas noted that there were $0 inflows, indicating that traders did not budge. Balchunas likened their resilience to the “Rock of Gibraltar” and praised the industry’s stability, stating that it is “lucky to have them.”
While the total outflows for the group of ETFs amounted to $168 million, this only represented 0.3% of the total assets under management (AUM). Notably, one-third of these outflows came from the Grayscale Bitcoin Trust (GBTC).
Balchunas speculated that more outflows could occur this week, estimating that a “couple billion” could leave, potentially up to 5%. However, he expressed surprise at the strength of the hodlers, particularly the older generation, compared to the weaker response from newer investors.
Market Reactions
The substantial outflows from the ETF market had significant repercussions on the overall market, pushing the Crypto Fear & Greed Index into the “extreme fear” zone for the first time in two years.
Bitcoin also experienced major fluctuations, crashing to $49,500 on August 5. During this crash, long-term BTC holders sold approximately $600,000 worth of the cryptocurrency, with the remaining losses attributed to short-term holders.
At the time of writing, however, Bitcoin has been slowly recovering, trading slightly below $57,000, increasing nearly 6% in the last 24 hours according to CoinMarketCap data.
Despite the market turmoil, Bitcoin and Ethereum ETFs still recorded nearly $6 billion in trading volume on August 5. Meanwhile, Ether ETFs remained “unfazed,” as highlighted by Balchunas on August 6. The Bloomberg analyst pointed out that equity ETFs took in “double the cash” compared to normal, despite what he described as the “scariest selloff in quite a while.”
In summary, while the Bitcoin ETF from iShares faced a challenging week, the unwavering stance of traders and the resilience of the market suggest a strong foundation amidst the volatility.
