BlackRock’s spot bitcoin exchange-traded fund is suffering its worst month ever, with the underlying asset experiencing its worst monthly fall in more than three years.
According to FactSet statistics, the iShares Bitcoin Trust ETF has had withdrawals of $2.2 billion this month as of Monday. That’s roughly eight times the $291 million in losses incurred by the investment vehicle in October, the second-worst month on record since its inception in early 2024.
The outflows coincide with the decline of bitcoin. The digital asset was last trading at $87,907.10, down more than 20% from the previous month and more than 40% from its early October peak of little over $126,000. That makes November the worst month for bitcoin since June 2022, when its value dropped by around 39%.
According to Jay Hatfield, CEO and portfolio manager of Infrastructure Capital Advisors, “there’s no doubt that hot-money investments have had significant outflows,”.
However, “the pullback is really focused on the gambling part of the market … and bitcoin is really the poster child for that,” according to him.
In light of growing economic uncertainty and indications of declining market mood, investors are pulling out of BlackRock’s fund to switch to riskier assets like gold.
A recent University of Michigan study revealed that consumer sentiment has plummeted to near-record lows. Meanwhile, investors are waiting for vital data from the September retail sales and producer price index reports, which are expected out on Tuesday. While the CME FedWatch Tool shows that traders are currently pricing in more than 80% odds that the Federal Reserve will decrease interest rates at its December meeting, such a move is far from certain.
Despite the uncertainties, bitcoin is bleeding. Investors in spot bitcoin ETFs, particularly newer holders, are under pressure to sell their shares, which might extend the asset’s downward in the short term, according to Frank Chaparro, head of content and special initiatives at crypto-focused trading platform GSR.
As the macroeconomic situation becomes less predictable, investors prefer to de-risk across assets, which frequently means reducing exposure to cryptocurrency and other risk-sensitive equities, according to Chaparro. And for newer entrants who came in through the funds, a fall might be disconcerting because they can sell as fast as they invested.
While spot bitcoin ETFs have attracted a slew of new retail investors who may be flighty during volatile times, the funds have also attracted a variety of long-term investors, including institutions that can hold through the downturn, according to Joshua Levine, chairman of bitcoin treasury firm OranjeBTC.
According to Levine, as the asset class develops, that institutional foundation may both smooth out the upside and mitigate some of the severe downside, lowering the volatility of bitcoin.
