Is the Bitcoin ETF Era Ending? Why Did Institutional Funds Suddenly Withdraw?

▲ Bitcoin (BTC) Exchange Traded Fund (ETF) ©CoinReaders

As institutional funds rapidly withdrew from the Bitcoin spot ETF market, an analysis emerged that a warning light has also been lit for BlackRock's iShares Bitcoin Trust (IBIT). However, some market participants also predict that the recovery to $80,000 will be a critical turning point for a future rebound.

According to the investment media outlet TradingNews on May 20 (local time), IBIT traded at around $43.99 on that day. The outlet reported that the entire U.S. Bitcoin spot ETF market concluded its six-week inflow streak and recorded a net outflow of approximately $1.04 billion. It specifically noted that on May 15 alone, about $635.23 million was withdrawn, leading to the strongest selling pressure this year.

The media attributed the fund outflows to rising U.S. inflation and interest rate concerns. With the U.S. Consumer Price Index (CPI) recording 3.8% year-over-year, the 10-year Treasury yield rose to 4.58%, and the possibility of an interest rate hike by the Federal Reserve (Fed) was highlighted again. During this process, Bitcoin (BTC) was analyzed to be trapped in a box range of $76,000 to $78,000, failing to recover the $80,000 level.

In contrast, the situation was the exact opposite until April. BlackRock's IBIT then recorded a net inflow of approximately $2 billion, leading the overall uptrend in the U.S. Bitcoin spot ETF market. ETF operators purchased about 19,000 BTC over nine trading days, which was roughly 10 times the amount of Bitcoin mined during the same period, the media explained. At that time, Bitcoin briefly surged to $81,000, boosting market sentiment.

Recently, there have also been signs of fund flows shifting to some altcoin ETFs. The Hyperliquid (HYPE) spot ETF surpassed Bitcoin ETF inflows during some periods in its early trading days, and funds also flowed into XRP and Solana (SOL) related products. Conversely, the Ethereum spot ETF experienced outflows for six consecutive trading days. Goldman Sachs and Harvard Fund reducing or completely divesting their Ethereum ETF holdings were also cited as bearish market signals.

TradingNews identified Nvidia's earnings announcement and a reversal in ETF fund flows as key market variables. The media assessed, "If Bitcoin recovers $80,000 with accompanying trading volume and a net ETF inflow of over $300 million occurs in a single day, the market sentiment could quickly reverse." Conversely, it diagnosed that if it falls below $74,000 and ETF net outflows continue, there is a possibility of a further decline to the low $70,000s.

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