BlackRock’s iShares Bitcoin Trust (IBIT), one of the largest Bitcoin exchange-traded funds (ETFs) in the United States, faced a historic withdrawal of $332.6 million on 2 January. This marks the fund’s largest outflow since its launch in early 2024.
The withdrawal broke the previous record of $188.7 million set just over a week earlier on 24 December. Over the past week, IBIT’s total outflows have reached a staggering $392.6 million, based on data from Farside Investors.
These withdrawals come as US trading resumed after the New Year’s Day holiday, highlighting a trend of investors pulling money from the fund. Despite these challenges, IBIT remains a significant player in the cryptocurrency ETF market.
In 2024, the fund ranked third among all US-listed ETFs, attracting $37.2 billion in inflows. It trailed only the Vanguard 500 Index Fund (VOO), which brought in $116 billion, and the iShares Core S&P 500 ETF (IVV), with $89 billion.
However, Bitcoin pioneer, Adam Back, remained optimistic about the future of Bitcoin ETFs. He suggested that by 2025, these funds could outperform traditional stock ETFs if Bitcoin’s price continues to climb.
Competing funds are gaining ground
While BlackRock is seeing massive withdrawals, other Bitcoin ETFs have reported inflows, showing a split in investor sentiment.
On 2 January, Bitwise’s Bitcoin ETF attracted $48.3 million in inflows, followed by Fidelity’s Wise Origin Bitcoin Fund with $36.2 million and Ark 21Shares with $16.5 million.
Grayscale’s Bitcoin Mini Trust also saw inflows of $6.9 million, although its larger GBTC fund recorded an outflow of $23.1 million.
In total, cryptocurrency ETFs experienced $242 million in net outflows on the same day, largely due to BlackRock’s substantial losses. Despite these overall outflows, the sector remains active, and experts see room for growth.
The president of ETF Store, Nate Geraci, believes new products like combined Bitcoin and Ethereum ETFs and spot Solana ETFs could drive further innovation.
“The crypto ETF space is evolving quickly”, Geraci said. “We’re expecting more creative and diverse offerings in the years ahead”.
Ethereum ETFs face challenges
Ethereum-focused ETFs are also under pressure, with investors pulling out $77.5 million on 2 January. The biggest losses came from Bitwise’s Ethereum ETF (ETHW), which saw $56.1 million withdrawn. Grayscale’s Ethereum ETF (ETHE) followed, losing $21.4 million.
Despite these outflows, trading activity in Ethereum ETFs surged, with total volume reaching $397.2 million on 2 January, compared to $313.1 million on 31 December.
This uptick in trading could indicate that investors are taking a more active approach to their portfolios as the year begins.
Ethereum ETFs have had a strong year overall, with BlackRock’s Ethereum Trust (ETHA) leading inflows at $3.52 billion, followed by Fidelity’s Ethereum Fund (FETH) with $1.56 billion.
These funds have collectively brought in $2.58 billion in net inflows since their launch in 2024.
What’s next for Bitcoin ETFs?
Despite recent setbacks, BlackRock’s iShares Bitcoin Trust remains the largest spot Bitcoin ETF, with total inflows of $36.9 billion since its inception and assets worth $53.5 billion.
Its holdings include more than 542,000 Bitcoin, making it the dominant player in the US Bitcoin ETF market with a 47.9% share.
Bitcoin ETFs played a key role in Bitcoin’s price surge in 2024, accounting for about 75% of new investments in the cryptocurrency.
This demand helped push Bitcoin past $50,000 in early 2024 and eventually reach an all-time high of $108,135 in December.
Looking forward, analysts see potential for further growth. The chief analyst at Bitget Research, Ryan Lee, believes Bitcoin ETFs will continue to attract institutional investors, potentially pushing Bitcoin’s price to $200,000 in 2025.
However, he cautioned that this will depend on market conditions, regulation, and broader economic factors.
Currently, Bitcoin is trading just under $100,000, with resistance levels at $97,600 and $99,000.
Analysts suggest that a breakout above $99,000 could trigger the liquidation of more than $1 billion in short positions, which could further shake up the market.
As the cryptocurrency ETF market grows, BlackRock’s performance will remain a focal point for investors.
