The largest cash bitcoin (BTC) exchange-traded fund lost half of its assets under management last Friday, which may have exacerbated bitcoin’s slide on Saturday.
The Purpose Bitcoin ETF saw an outflow of 24,510 bitcoins on Friday, the most severe single-day buyback since the fund debuted on the Canadian stock exchange in April 2021, according to Norway-based firm Arcane Research.
The outflows meaning the fund had to sell around $500 million in BTC at Friday’s price, adding to selling pressure in an already shaky crypto market, Arcane writes in a report.
“The huge outflows are likely caused by a forced seller as part of a huge sell-off,” writes Arcane analyst Vetle Lunde. “The forced sale of 24,000 BTC may have triggered the downward movement of BTC towards $17,600 this weekend”.
The Purpose Bitcoin ETF saw an outflow of 24,510 BTC last Friday, losing half of its assets under management in one day. (Arcane Research)
Bitcoin (BTC) broke below $20,000 on Saturday, tumbling as low as $17,678. Traders have been rattled by fears of insolvency in the credit sector. crypto-currencies, as cryptocurrency lender Celsius Network halted customer withdrawals, BlockFi sought additional funding, and cryptocurrency hedge fund Three Arrows Capital confirmed it suffered heavy losses.
The weekend’s price action also marked the first time the biggest cryptocurrency fell below the all-time high from the previous cycle, recorded in December 2017, at $19,783.
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Bitcoin ETFs track the value of bitcoin and allow a way to invest in the largest cryptocurrency without having to deal directly with the crypto; they can be bought, sold and traded on traditional exchanges rather than cryptocurrency trading platforms. On the same subject : Are sanctions a good thing? Why are bitcoin, ethereum and dogecoin recovering well today?. ETFs add and sell bitcoin to match investors investing in or redeeming the fund.
The Purpose Bitcoin ETF was by far the largest product traded in stock Exchange bitcoin-focused, managing nearly 48,000 bitcoins ahead of Friday’s redemptions. Today, the fund only holds around 23,300 BTC.
Another bitcoin-focused fund, the 3iQ CoinShares Bitcoin ETF, suffered large outflows last month, selling 7,401 BTC of its holdings.
Following last week’s outflows, the Purpose Bitcoin ETF lost its top spot to the New York Stock Exchange-listed ProShares Bitcoin Strategy ETF (BITO), which holds futures on bitcoins instead of cash bitcoins.
Last week, BITO saw its second-largest net inflow since its launch last October, which saw the fund’s bitcoin exposure grow by the equivalent of 4,115 BTC. The data shows that the fund manages $668 million in assets, which equates to around 31,500 BTC.
The contrast suggests that “at least some investors invested in the current BTC selloff as an attractive entry point, taking advantage of forced sellers” for a near-term relief rally, Lunde wrote in the Arcane Research report. .
Overall, crypto funds that manage bitcoin reported $28 million in inflows last week, appearing to benefit from price weakness, crypto fund provider CoinShares reported on Monday.
“Opinion among investors is extremely polarized, with some seeing this as a big buying opportunity, while others are spooked, liquidating positions,” James Butterfill, head of research at CoinShares, told CoinDesk in an email. “Fund flows are likely to remain mixed.”