Investors Are Selling Bitcoin ETFs. Here's Why Now's the Time to Buy.
Written by Alex Carchidi for The Motley Fool -> At least one investor dumped their holdings of a Bitcoin ETF recently. Other investors have been following suit. Geopolitical and macroeconomic instability are probably to blame, but they're both temporary. When popular crypto e
At least one investor dumped their holdings of a Bitcoin ETF recently.
Geopolitical and macroeconomic instability are probably to blame, but they're both temporary.
When popular crypto exchange-traded funds (ETFs) start bleeding capital, it's natural to want to head for the door yourself. Spot Bitcoin (CRYPTO: BTC) ETFs have shed in the ballpark of $3 billion across 10 consecutive trading sessions, with the iShares Bitcoin Trust (NASDAQ: IBIT) absorbing the brunt of the outflows. The salt in the wound was on May 26, when an unidentified actor unloaded more than $1.2 billion of IBIT shares at a 2.3% discount, accepting a loss of nearly $30 million for an instant exit. It's usually not a good sign when big players make a hasty exit, taking a multi-million-dollar loss to make it quick.
Nonetheless, this is precisely the kind of stretch that hands long-term holders an opening. The coin's fundamentals haven't moved an inch. If you're patient, this could be a great time to start buying. Here's why.
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The unresolved conflict in the Middle East, and its potential to further upend the global economy, is likely the single biggest culprit for the outflows. While crypto markets aren't necessarily directly exposed to the price of oil or other globally critical commodities like fertilizers, whose prices are highly affected by a closed Strait of Hormuz, the unprecedented uncertainty is enough to drive many investors into risk-off mode, which means they'd be eager to sell volatile risk-on assets like crypto.
It's also important to put the outflows into context. Spot Bitcoin ETFs still hold around $105 billion in assets under management, and cumulative net inflows since their January 2024 launch are at $55 billion. In other words, one Iran-war-driven week of rebalancing does not unwind two years of institutional onboarding through the spot Bitcoin ETF wrapper .
While spot Bitcoin ETFs were losing capital in May, public companies added 51,000 BTC to their treasuries, with Strategy alone acquiring 25,404 BTC. Furthermore, the soon-to-IPO SpaceX disclosed an 18,712 BTC position in one of its IPO-related filings. That total is more than triple what Bitcoin miners produced during the entire month.
