Bitcoin Spot ETFs Face Historic Outflows Amid Global Market Turmoil

Last week, US Bitcoin spot Exchange Traded Funds (ETFs) endured their most substantial capital exodus since February, witnessing a staggering net outflow of $1.72 billion. This dramatic shift, primarily triggered by robust US macroeconomic data and diminishing expectations for interest rate cuts, sent palpable shockwaves through the cryptocurrency market, global technology stocks, and Asian equities alike.

BlackRock’s IBIT Records Largest Weekly Outflow Since Inception

According to data compiled by SoSoValue, the cumulative net outflow from US Bitcoin spot ETFs reached an alarming $1.72 billion over the past week. With the exception of a minor $3 million net inflow recorded on Thursday, these funds experienced persistent and significant withdrawal pressure throughout the trading week.

Notably, BlackRock’s IBIT, which holds the top position in net assets among US spot Bitcoin ETFs, bore the brunt of this downturn. The fund bled an astounding $1.34 billion last week, marking its most severe single-week outflow since its launch in January 2024. This recent selling spree extends a broader trend of capital flight that began in May, a month which saw the entire Bitcoin ETF market record a total net outflow of $2.43 billion.

Strong US Jobs Data Dims Appeal of Non-Yielding Assets

Andri Fauzan Adziima, Head of Research at crypto exchange Bitrue’s research arm, attributes the massive withdrawals from Bitcoin ETFs to the profound impact of recent macroeconomic developments, with US employment data being a primary catalyst. Adziima explained:

“May’s robust US non-farm payroll data underscored the remarkable resilience of the labor market. This not only shattered market expectations for an imminent Federal Reserve interest rate cut but also propelled US Treasury yields higher. In such an environment, bonds offering stable income distributions naturally become far more attractive to investors than non-interest-bearing assets like Bitcoin.”

Risk-Off Sentiment Spreads: Asian and Tech Stocks Not Spared

The convergence of dashed interest rate cut hopes and persistent geopolitical uncertainties has ignited a potent “risk-off” sentiment across global capital markets. This ripple effect has extended far beyond the cryptocurrency sector, impacting AI-related stocks, the broader technology sector, and even the gold market.

For instance, the South Korean stock market, which had previously surged on the back of the tech and AI boom, saw its benchmark KOSPI index plummet by a staggering 8.29% at Monday’s close. Other major Asian markets also experienced significant declines, with Japan’s Nikkei 225 index falling 3.85% and Taiwan’s Weighted Index (TAIEX) dropping 3.48%.

Analyst Outlook: Capital Momentum Expected to Stabilize Mid-to-Late June

Despite the prevailing market gloom, Andri Fauzan Adziima offers a cautiously optimistic forecast:

“I anticipate capital flows will remain under some pressure during early June. However, by mid-to-late June, as market panic potentially bottoms out, combined with June’s traditional seasonal advantages, any signs of macroeconomic reprieve could stimulate bargain hunting. This could allow overall capital momentum to stabilize, or even shift towards modest net inflows.”

On a more immediate note, after last week’s sharp 15% decline, Bitcoin demonstrated a notable recovery over the weekend. The digital asset briefly surged past the $64,000 threshold before consolidating around the $63,000 mark. Analysts widely interpret this bounce as a classic “oversold rebound,” suggesting a temporary correction after significant downward pressure.