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Bitcoin ETFs are experiencing significant outflows, totaling $218 million this week as investors exercise caution ahead of President Trump’s tariff announcement.
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Notably, major funds like Bitwise and Ark Invest saw net outflows, while only BlackRock’s IBIT managed to record positive flows during this period.
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“Institutional investors are strategically reducing their risk in the face of impending market volatility, steering towards gold as a preferred safe-haven asset,” a source noted.
This week, Bitcoin ETFs face $218 million in outflows as investors brace for Trump’s tariff announcement, reflecting rising caution amidst market volatility.
Bitcoin ETFs Experience Significant Outflows as Caution Prevails
Data compiled by Farside Investors indicates a marked trend of net outflows for Bitcoin ETFs, continuing over the past week. Specifically, exchanges recorded two straight days of negative flows since Monday. Major funds such as Bitwise (BITB), Ark Invest (ARKB), and WisdomTree (BTCW) experienced significant withdrawals totaling $60.6 million on Monday alone, with only BlackRock’s IBIT remaining a bright spot among Bitcoin ETFs by attracting certain positive flows.
On Tuesday, outflows escalated further, nearing $158 million, as Bitwise and Ark Invest led the withdrawals. Notably, by April 1, BlackRock’s IBIT also reported zero flows, indicating a stark shift in investor sentiment. Ethereum ETFs did not fare any better, with a recorded outflow of $3.6 million, underscoring a pervasive sense of caution among institutional investors.
“The Spot Bitcoin ETFs observed a staggering $157.8 million outflow yesterday, while the Spot Ethereum ETFs experienced a $3.6 million outflow. Institutions are clearly gearing up to reduce risk ahead of today’s anticipated tariff announcement,” noted analyst Crypto Rover.
Bitcoin ETF flows. Source: Farside Investors
The current market sentiment suggests that traders are adopting a “wait-and-see” strategy, which is understandable given the stakes related to President Trump’s upcoming Liberation Day announcement set for April 2.
With President Trump poised to unveil potentially sweeping tariffs, market participants across various sectors are holding their breath for details that could propel significant economic shifts. The ambiguity surrounding these tariffs introduces a great deal of uncertainty about their impact on both the broader economy and the cryptocurrency market.
Bloomberg reported, “The White House has not reached a firm decision on their tariff strategy,” citing sources familiar with the negotiations.
Despite the unclear landscape, it is reasonable to see why investors are exhibiting caution, particularly in light of prior tariff announcements that have historically influenced Bitcoin prices. Many analysts predict increased market volatility, with the possibility of stock and crypto market corrections ranging between 10-15% if Trump moves forward with broad tariffs.
“April 2nd is akin to election night. It’s the most significant event of the year by far, magnitudes beyond any FOMC meeting, and anything could occur,” economic analyst Alex Krüger stated.
The prevailing market sentiment is notably cautious, with a notable shift of some investors toward gold as a safe haven. A recent Bank of America survey revealed that 58% of fund managers view gold as a preferred safe haven in times of trade conflict, while only a mere 3% favor Bitcoin.
Such findings highlight the concerns institutional investors have around Bitcoin concerning its volatility and perceived lack of liquidity during crises, which hinders its adoption as a safe-haven asset. Historically, turbulence in trade relations has driven capital toward more stable assets.
As anticipation builds towards Trump’s Liberation Day announcement, many investors are strategically reallocating their assets, preferring gold over Bitcoin as a safe haven option.
However, despite the current challenges in attracting institutional safe-haven flows, Bitcoin’s long-term narrative remains unscathed, evidenced by the quantity of Bitcoin on exchanges plummeting to just 7.53%, marking the lowest level observed since February 2018.
Bitcoin supply on exchanges. Source: Santiment
When the supply of an asset on exchanges decreases, it typically denotes that holders are not inclined to sell, signaling greater long-term confidence among investors.
Conclusion
In summary, the current landscape for Bitcoin ETFs indicates substantial outflows driven by investor caution ahead of pivotal economic announcements. As institutional players reassess their strategies, favoring traditional safe-haven assets like gold, Bitcoin’s long-term prospects remain intact due to reduced supply on exchanges. Market participants should continue to monitor developments closely, especially as further announcements may have significant implications for both the cryptocurrency and broader financial markets.
