bitcoin ETF outflows are rising once again after a turn in the tide last week. These outflows, given the ETFs' correlation with the price of bitcoin, have a substantial impact on the cryptocurrency's performance over time. So as money outflows increase, will it cause a drop in the price of btc?
ARK Invest and Grayscale lead the exits
While Grayscale's Spot bitcoin ETF has been the natural culprit for ETF outflows due to its high fees, another fund has United the trend in a surprising turn of events. Cathie Wood's ARK Invest saw a substantial outflow from its ETF, leading to a new record for the investment firm.
The Ark 21Shares fund (ARKB) saw a record outflow of $87.5 million on Tuesday, April 2. Interestingly, the fund's outflows were even larger than Grayscale, which saw around $81.9 million in outflows on the same day.
For both funds, it marked the second consecutive day of outflows, although it was more worrying for the Ark 21Shares Fund. This is because Grayscale saw a decrease in capital outflows between Monday and Tuesday, going from $302.6 million to $81.9 million. While outflows from the ARK Invest fund went from $0.3 million on Monday to $87.5 million on Tuesday, resulting in a 29,000% increase in outflows in a single day.
However, only these two funds have seen capital outflows this week, as the other ETFs continue to show upside. While Monday's net flows ended up being negative to the tune of $85.7 million, Tuesday's numbers looked better with positive net flows of $40.3 million.
How will this affect the price of bitcoin?
Since bitcoin Spot ETFs were approved in January, their effect on the price of bitcoin has been generally positive. However, there have been points where fund outflows have affected the price of btc, causing it to fall.
Some examples of this came in January, a week after ETFs were first approved. Outflows had plagued funds and the price of bitcoin had declined as a result. On the other hand, in March, when capital outflows turned negative between March 18 and 22 and the price of bitcoin plummeted from $73,000 to $61,000.
Given btc's performance during periods when capital outflows into spot ETFs are prevalent, this current trend does not bode well for the price. There has been a recovery in the btc price after inflows turned positive on Tuesday. But unless they remain positive until the end of the week, btc price could see further declines towards the $60,000 level.
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btc price recovers above $66,000 | Source: BTCUSD on Tradingview.com
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