Capital inflows into Bitcoin ETFs have resumed. What has changed?

Capital inflows into Bitcoin ETFs have resumed. After a record outflow of funds from Bitcoin ETFs in early May, investors have returned to buying shares of exchange-traded funds.

For the first time since their launch in January 2024, capital inflows into all Bitcoin ETFs simultaneously turned positive. Despite a 10% decrease in the price of Bitcoin following its historical high of $74,000 in March, more than 95% of holders of shares in Bitcoin exchange-traded funds (ETFs) did not sell their assets, noted ETF analyst Eric Balchunas at Bloomberg.

"We're not going to celebrate victory, as some did during the capital outflow," said Eric Balchunas. "But it's important to note that ETF investors demonstrated resilience even in the face of fairly unpleasant and prolonged downturn."

On Monday, 11 Bitcoin exchange-traded funds attracted $217 million. According to SosoValue data, the Grayscale Bitcoin Trust (GBTC) fund attracted capital of $4 million for the first time in a long while.

The total outflow of funds from the GBTC fund since its launch in January amounted to $17 billion. As of May 7, the fund managed 292,217 bitcoins worth $18.4 billion, half of what it was in January at the start of trading.

Historical data analysis shows that exchange-traded funds (ETFs) generally demonstrate stable growth in assets in the long term, and ETF investors are characterized by resilience, noted Balchunas.

According to The Block, the volume of Bitcoin ETF share trading significantly decreased in May compared to the March peak. The total trading volume for the past week amounted to about $11 billion, whereas in the first week of March, it exceeded $32 billion.

The BlackRock Bitcoin ETF, whose daily inflow of funds ceased at the end of April, attracted $22 million in May, according to SosoValue data. Other Bitcoin ETFs also attracted funds from investors. A week after the record outflow of $564 million on May 1, inflows resumed in BTCO from Invesco and Galaxy Digital. Bitwise, VanEck, and Franklin Templeton funds attracted $2 million each.

By early May, 11 American spot exchange-traded funds were managing 822,000 bitcoins ($52 billion), which is 4.1% of all bitcoins in circulation.

Investors in Hong Kong sharply reduced their activity in investments in recently launched spot exchange-traded funds on Bitcoin and Ethereum. The volume of fund inflows into two Hong Kong spot exchange-traded funds decreased to zero. Investors withdrew 75.36 bitcoins from the China Asset Management (ChinaAMC) spot exchange-traded fund. The volume of assets managed by Bitcoin ETFs in Hong Kong as of May 7 amounted to $199 million. Exchange-traded funds own 3,130 bitcoins.