BlackRock’s spot bitcoin exchange-traded fund is experiencing its worst month on record as its underlying assets are suffering their biggest monthly loss for more than three years.
According to Monday FactSet data, the iShares Bitcoin Trust ETF has experienced outflows totaling $2.2 billion this month.
This is almost eight times the losses of $291 million incurred by the investment vehicle in last October, or its second-poorest month in history since its debut in early 2024.
Therefore, the outflows come after bitcoin is accelerating, the digital asset was recently at $87,907.10, more than 20 percent over the past month, and down more than 40 percent from its peak of slightly above $126,000 reached in early October.
It is the worst month in the history of Bitcoin since June 2022, when the value of the asset declined by approximately 39 percent.
CEO and portfolio manager at Infrastructure Capital Advisors, Jay Hatfield, informed CNBC that “There’s no doubt that hot-money investments have had significant outflows.”
But, “the pullback is really focused on the gambling part of the market … and bitcoin is really the poster child for that,” he stated.
Therefore, the investors are leaving the BlackRock fund to liquidate into risk-off spots like gold in the face of increasing economic uncertainty and market sentiment deterioration.
According to a recent survey conducted by the University of Michigan, consumer sentiment has plummeted to nearly record-low levels. However, investors are waiting for the key information on the retail sales and producer price index reports, which will be released on Tuesday.
The CME FedWatch Tool reports that the traders are currently placing over 80 percent of bets that the Federal Reserve will reduce the rates at its December sessions, but a reduction will hardly qualify as a sure bet.
Head of Content and Special Projects of crypto-focused trading company GSR, Frank Chaparro, reported to CNBC that, eventually, Bitcoin is accelerating after all the uncertainty. The investors in spot bitcoin ETFs, especially more recent investors, are under pressure to sell their shares, a fact that may push the asset to the downside in the near future.
Chaparro added that “With the macro environment becoming less certain, investors tend to de-risk across assets, which often means trimming exposure to crypto and other risk-sensitive stocks. And for newer entrants who came in through the funds, any downturn can be unsettling – they can sell just as quickly as they bought.”
Chairman of Bitcoin Treasury company OranjeBTC, Josh Levine, said to CNBC, as it is true that spot bitcoin ETFs have drawn in hordes of new retail purchasers who could be unreliable in turbulent periods, the funds have also drawn in various long-term investors, including institutions, who can hold the money in a bearish market.
Levine added that the institutional base could “dampen some of the extreme downside, but also smooth upside, reducing bitcoin’s volatility as the asset class matures.”
