Bitcoin price drops below $110.000 amid record outflows from spot ETFs

Bitcoin price drops below $110.000 amid record outflows from spot ETFs

Bitcoin is correcting amid rising ETF outflows, but Charles Schwab reports record retail interest. What's next for the crypto market?

The Bitcoin price has experienced a week of high volatility, with a significant drop that briefly brought its price below USD 104.000. This sharp move has impacted market confidence, especially among institutional investors operating on Wall Street. The sell-off resulted in an unprecedented outflow of capital from Bitcoin spot ETFs, which had been the main driver of steady inflows into the market in recent months.

Meanwhile, the story is not the same for retail investors. Charles Schwab has noted that, despite the drop in the price of the market's leading cryptocurrency, retail investor interest in digital assets remains intact and, in fact, continues to grow. The tension in the market is evident: on the one hand, there is panic and selling driven by institutional investors, and on the other, retail investor confidence appears to remain strong, looking at the long term.

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Major investors liquidate their Bitcoin spot ETFs after a sharp drop

Bitcoin's arrival on Wall Street in early 2024, driven by the approval of spot ETFs in the United States, was enthusiastically greeted as a significant leap toward the institutionalization of the leading cryptocurrency. However, this week saw the flip side of this enthusiasm. As Bitcoin's price abruptly dropped by more than $10.000 in just days, large investors began rapidly liquidating their positions. Spot ETFs in the United States experienced one of their worst weeks since their debut, with net outflows exceeding $1.200 billion.

Current price of Bitcoin (BTC).
Source: CoinGecko

Data from SoSoValue, a platform specializing in crypto exchange-traded fund analysis, reveals a clear shift toward a more cautious and risk-averse attitude among institutional investors. 

The strongest impact was felt on the market's leading issuers. BlackRock's iShares Bitcoin Trust (IBIT), considered the giant in the sector, was the hardest hit, losing nearly USD 269 million in capital. It was followed by Fidelity's (FBTC) fund, with outflows of USD 67 million, and also Grayscale's GBTC fund, which, despite having previously moderated its withdrawals, added another USD 25 million in losses.

Capital flows into Bitcoin spot ETFs.
Source: SoSoValue

During the week, the prevailing feeling was one of deep nervousness. Smaller exchange-traded funds failed to attract new investments that could offset the constant outflow of capital from the major players. Thus, although there was a brief respite on Tuesday, when a modest inflow of capital was recorded, it was not enough to halt or reverse the negative trend. By Friday, outflows from spot ETFs accelerated dramatically, reaching USD 366 million in a single day. This behavior reinforces the defensive strategy of large operators, who seem to prioritize the need to secure profits or limit losses in the face of the growing volatility of the crypto market. 

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Schwab defies panic with growth data

However, while headlines focused on institutional withdrawals, Charles Schwab is offering a radically different perspective from the retail investor's perspective. Despite the sell-off and falling prices, the firm insists that cryptocurrencies remain one of the most vibrant and talked-about sectors among its client base.

Rick Wurster, CEO of Charles Schwab, stated that digital asset products are experiencing record levels of client engagement. In an interview with CNBC, he said the firm's internal data supports this optimistic view, saying that web traffic to the platform's crypto content pages has increased by an impressive 90% over the past year. He said this suggests an educational and investment interest that transcends daily volatility.

Wurster also highlighted the deep penetration these assets already have among their users. He asserted that cryptocurrency ETPs are extremely active and noted that his clients already own around a fifth (20%) of all crypto investment products available in the United States. His comments suggest that retail investors are opting to position themselves long-term in the market.

In addition to Wurster, ETF strategist Nate Geraci provided his insight into recent developments in this segment. full test, based on current sources and trends, reinforces the idea that cryptocurrency-related exchange-traded funds will continue to gain prominence and could consolidate new opportunities for different types of investors, despite recent value outflows.

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