U.S. Bitcoin ETF net outflow hits record high, with $1.2 billion outflow

By Sidhartha Shukla, Suvashree Ghosh, Bloomberg

U.S. bitcoin exchange-traded funds posted their longest daily net outflows since listing early this year, part of a pullback from riskier assets amid challenging times for global markets.

Investors pulled a total of nearly $1.2 billion from the 12 ETFs in the eight days through Sept. 6, data compiled by Bloomberg showed. The outflows come amid a turbulent period for stocks and commodities amid concerns about economic growth.

Mixed U.S. jobs data and deflationary pressures in China are also weighing on traders. The uncertainty is hitting the cryptocurrency market, whose volatility is more closely tied to that of the stock market as the short-term correlation between the two is rising.

Bitcoin had a poor month in September, falling about 7%. But the largest digital asset rose slightly over the weekend and was up about 1% to $54,870 as of 1 p.m. Singapore time on Monday.

Debate Avoided

“This small rally appears to be driven in part by some high-profile influencer liquidations,” said Sean McNulty, trading director at liquidity provider Arbelos Markets. He cited a recent social media post by Arthur Hayes, co-founder of the BitMEX trading platform, as an example.

McNulty said improved performance of Republican presidential candidate Donald Trump in polls and prediction markets may also have played a role. He reported that demand for options hedging would increase if Tuesday’s debate between Trump and Democratic candidate Vice President Kamala Harris sparked market volatility. Harris has yet to elaborate on her stance on cryptocurrencies.

The U.S. Bitcoin ETF, which invests directly in the original cryptocurrency, debuted in January to widespread attention. Unexpectedly strong demand pushed the token to a record high of $73,798 in March. Inflows have since slowed, and Bitcoin's gains so far this year have fallen to about 30%.

Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for digital asset derivatives trading, said the token is likely to trade in a recent range of $53,000 to $57,000 ahead of the release of U.S. consumer price data on Wednesday. The inflation data could affect expectations about the pace of monetary easing expected by the U.S. Federal Reserve.