Seven days of bitcoin ETF outflows: what an ETF is, and why selling spreads

Investors pulled about $185 million out of US spot bitcoin exchange-traded funds on Friday, 13 November, the seventh trading day in a row of net withdrawals, according to flow data from SoSoValue and Farside reported by TokenPost and KuCoin News. BlackRock's iShares Bitcoin Trust (IBIT) accounted for about $143.5 million of the outflows and Fidelity's Wise Origin Bitcoin Fund (FBTC) for about $41.9 million; the other spot funds reported no net flows that day.

Over the full streak, from 5 to 13 November, Farside's tally comes to roughly $1.9 billion of net outflows, Stablecoin Insider reported, while another count puts it nearer $1.7 billion; the gap reflects different windows and methods. Bitcoin itself fell below $68,000 and was down about 11% for the month and about 21% for the year, according to figures from CoinDesk cited by the same report.

To see why these flows matter, it helps to start with what an ETF is.

What an ETF is

An exchange-traded fund is a fund whose shares trade on a stock exchange like an ordinary company's shares. Behind each share sits a basket of assets that the fund holds: for a stock ETF, a set of company shares; for a spot bitcoin ETF, actual bitcoin kept by a custodian. Buying one share of a bitcoin ETF gives an investor exposure to the price of bitcoin without having to open a crypto exchange account or store the coins themselves.

That convenience is why the US spot bitcoin funds grew so fast after their launch. They held about $86 billion of assets in total as of mid-November, with cumulative net inflows of about $55 billion since launch, according to the flow data reported by Stablecoin Insider.

How these funds came about

US regulators approved the first spot bitcoin ETFs in January 2024, after years of rejecting similar applications. Before that, US investors who wanted bitcoin through a brokerage account had to use futures-based funds or trusts that often traded away from the coin's actual price. The arrival of large asset managers, led by BlackRock and Fidelity, brought bitcoin into ordinary investment accounts, and their funds quickly became the biggest holders. That size is also why their daily flows now move the market: when they buy or sell, the amounts are large enough to be felt.

How money flows in and out

The number of ETF shares is not fixed. When more investors want to buy than sell, specialised trading firms called authorised participants create new shares, and the fund buys more bitcoin to back them. When more investors want to sell, the process runs in reverse: shares are redeemed, and the fund sells bitcoin, or hands it back, to cover them. These are the inflows and outflows reported each day.

So an outflow is not just a statistic. On a day of net redemptions, bitcoin held by the funds is released into the market, adding to selling pressure.

Why selling can spread

Several days of outflows can feed on themselves. Falling prices make holders more nervous; some sell to limit losses, and traders who borrowed money to bet on rising prices may be forced to sell when their positions fall below required margins, which accelerates the drop. Reports this week pointed to large liquidations of leveraged positions as bitcoin slid.

The effect also travels across the crypto market. Ether, the second largest cryptocurrency, often moves in the same direction as bitcoin when sentiment turns, and shares of companies that earn money from crypto trading, such as exchanges, tend to fall with trading activity. On our markets pages, these knock-on moves are shown next to the bitcoin move they followed.

Why it matters beyond crypto

ETF flows are a useful window into how traditional investors feel about bitcoin, because these funds are bought through ordinary brokerage accounts and retirement platforms. A long run of outflows suggests that some of that money is stepping back, often when interest rates are rising and safer assets such as government bonds pay more. With the 10-year US Treasury yield above 5% this week, the return on low-risk assets has become harder for volatile investments to beat.

What we do not know

Daily flow figures are compiled by data providers from fund disclosures and can be revised. Outflows describe what investors did, not why each of them did it. The next data, covering trading on Monday, 16 November, will show whether the streak continues.

This article explains how these funds work and is not investment advice.