Bitcoin ETF outflows hit $3.4 billion as Balchunas calls selloff noise

Bitcoin slid toward $70,000 on Tuesday as a record 11-day ETF outflow streak reached $3.45 billion, though Bloomberg Intelligence analyst Eric Balchunas dismissed the redemptions as noise in a market with roughly $100 billion in assets.

"$3 billion in outflows from a market with about $100 billion in assets is totally meaningless compared with normal ETF flow patterns," Balchunas said in a CoinDesk "Public Keys" interview. He compared the Bitcoin ETF redemptions to major S&P 500 funds, which regularly experience inflows and outflows without signaling a fundamental shift in investor sentiment.

BTC traded near $68,500 as of 08:00 UTC, down 4% in the past 24 hours and extending a weeklong slide that has pushed it to the lowest level since April 7. The selloff accelerated after Strategy (MSTR) disclosed its first publicized bitcoin sale since 2022, selling 32 coins for $2.5 million to fund preferred stock distributions. U.S. spot Bitcoin ETFs logged 11 straight sessions of net redemptions through Monday, the longest streak since their January 2024 launch, with $484 million withdrawn in the latest session alone, according to SoSoValue data.

The outflows look dramatic in headlines, but the broader adoption story remains intact. Cumulative net inflows since spot Bitcoin ETFs launched peaked at roughly $63 billion and remain near $57 billion, Balchunas said, a sign that investors have largely stayed invested through market volatility. He called the launch of spot Bitcoin ETFs the most successful ETF rollout on record, citing the speed with which products like BlackRock's iShares Bitcoin Trust (IBIT) accumulated assets. ETF share counts have continued to grow even as Bitcoin's price declined, suggesting ongoing adoption rather than investor flight.

Wall Street Doubles Down Despite Price Weakness

Morgan Stanley, Goldman Sachs, and BlackRock are all developing additional Bitcoin-related products, Balchunas said, arguing that institutional interest remains strong and should continue supporting demand for crypto investment vehicles. The expansion comes even as other measures of institutional demand show signs of softening. CryptoQuant warned in its most recent weekly report that ETF and corporate treasury accumulation has slowed markedly in recent months, making the current outflow streak another sign that one of the primary sources of demand underpinning Bitcoin's rally may be fading.

Balchunas cautioned the industry against relying solely on the narrative that more institutional investors are coming. He said Bitcoin's appeal as a hedge against currency debasement should remain central to the investment case, adding that "the ETFs became such a big story they almost overtook the narrative."

The divergence between short-term outflows and long-term adoption creates an uncertain near-term outlook for Bitcoin. With ETF demand still flowing the wrong way and Strategy disclosed as a seller, there is no obvious catalyst for an immediate reversal. Yet the resilience of cumulative net flows — still near $57 billion despite a roughly 50% drawdown from all-time highs — suggests that the institutional base that built over 18 months has not abandoned the asset class.

This article is for informational purposes only and does not constitute investment advice.