Bloomberg ETF analyst James Seyffart emphasizes that days of zero inflows for Bitcoin exchange-traded funds (ETFs) are commonplace and should not be misconstrued as a failure of the products. According to Seyffart, the majority of all United States ETFs often record zero inflows, which is typical for any ETF within a given sector.
Seyffart explains that for an ETF to register new inflows or outflows, there must be a significant disparity between supply and demand, warranting the creation or redemption of new fund shares known as “creation units.” This process occurs when the mismatch in supply and demand surpasses the threshold necessary to tap into the underlying market.
Creation units, which are the standardized blocks of ETF shares created and redeemed, vary in size depending on the specific ETF. Seyffart notes that in the case of spot Bitcoin ETFs, creation units typically range from 5,000 to 50,000 shares.
Recent data shows that four of the last six trading days saw net outflows for all ten U.S. spot Bitcoin products. Notably, the Grayscale Bitcoin Trust (GBTC) experienced significant outflows, while the Blackrock iShares Bitcoin ETF (IBIT) saw notable inflows. However, several ETFs, including those from Bitwise and Invesco Galaxy, recorded zero new inflows.
The recent net outflows coincide with a period of subdued price action for Bitcoin, which has declined by 7.8% over the week. Market observers attribute this volatility to escalating geopolitical tensions in the Middle East and the impending Bitcoin halving event scheduled for April 20.
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