Bitcoin ETF Outflows Deepen as Retail Caution Grows

Key Points: 

• Bitcoin ETF outflows intensified as prices held firm, signaling cautious retail positioning.
• Ethereum funds mirrored Bitcoin redemptions despite a strong start to January.
• Capital rotated selectively into XRP products while broader market sentiment remained defensive.

Bitcoin ETFs prolonged a stream of outflows this week, despite Bitcoin prices being high. This shows massive retail investor caution as more volatility is emerging.

Between January 5 and January 9 (ET), the net outflows of Bitcoin spot ETFs were recorded as $681 million. It was further pressed when Bitcoin ETFs recorded an increase of net redemptions of $249.99 million on January 9 alone, and it was the fourth consecutive day of net redemptions.

ETF data: SoSo Value

Bitcoin ETF Outflows Extend to $1.38 Billion

The recent selloffs rounded out a four-day selling spurt, which raised the total Bitcoin ETF redemptions to $1.38 billion. The January 6, 7, and 8 data indicated that $243.24 million, $486.08, and $398.95 million were exiting daily, respectively.

BlackRock had the most outflows of about $251.97 million, its IBIT made January 9 withdrawals. The FBTC of Fidelity was the only product that realized inflows of $7.87 million. BITB at Bitwise recorded a redemption of 5.89 million, and the majority of other issues recorded a flat redemption.

The sale was a reversal of a good January beginning. Bitcoin ETFs posted ETF inflows of $471.14 million on January 2 and $697.25 million on January 5, the best one-day inflows since mid-December.

The same was also observed in Ethereum spot ETFs, where January 9 registered net outflows of 93.82 million. It was the third day of redemptions, and the cumulative amount of redemptions in the three days amounted to $351.44 million.

The outflow cycle commenced with a balance of $98.45 million on the 7th of January and increased to $159.17 million on the 8th of January. Consequently, the total net assets of Ethereum ETFs dropped to $18.70 billion on January 9 compared to $20.06 billion on January 5.

Ethereum products were also gaining good momentum in January. On January 2, there were inflows of $174.43 million, on January 5, the same were $168.13 million, and on January 6, the inflows were $114.74 million, and then sentiments changed.

Whales Prefering Solana and XRP Products Over Bitcoin ETFs

Even though Bitcoin and Ethereum funds experienced a steady sell-off, the capital did not withdraw completely from the market of digital assets. On January 9, Solana spot ETFs registered zero flows, which indicates stability of the ETFs following previous inflows. The positive trend of XRP spot ETFs continued as it received a total of $4.93 million that day.

From January 5 to January 9, Solana ETFs showed a net inflow of $41.08 million, and XRP products $38.07 million. The deviation indicated selective rotation and not general risk-off behavior.

Bitcoin prices kept on trading within a larger upward framework, even with its outflows. Bitcoin was trading around its current highs in the market, despite volatility rising and retail trading diminishing in the short term. Sentiment indicators also indicated increasing fear among the short-term holders. In the past, consolidation periods when prices are stable, and retail investors are in a de-grossing position, have often occurred during the period right after strong rallies.

Analysts observed that these disparities between price action and retail activity in previous cycles have been associated with a build-up by long-term investors.

Bitcoin ETF and Trading Activity Decline

The total net assets under management in Bitcoin ETFs decreased to $116.86 billion as of January 9, compared to January 5, when it was at $123.52 billion. Net inflows, as cumulative, decreased to $56.40 billion over the same period, whereas daily trading volume decreased to $2.97 billion.

IBIT BlackRock remained the top firm in the market with a cumulative inflow of $62.41 billion. The FBTC came in at $11.72 billion. The GBTC of Grayscale has had cumulative net outflows of $25.41 billion since its conversion.

With the current wider uptrend in Bitcoin, the disparity between the resilience of prices and defensive retail trading is a prominent market indicator that will influence future trading patterns.

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