Spot Bitcoin exchange-traded funds (ETFs) in the US saw a shift to outflows on February 3, as the Bitcoin price dipped to a three-week low. This change in investor sentiment was largely driven by the risk of a trade war, which spooked investors and resulted in over $2 billion in liquidation in the crypto derivatives market.
Outflows from Bitcoin ETFs
According to data, the 12 spot Bitcoin ETFs recorded a net outflow of $234.54 million on Monday, February 3. This marked the end of a four-day inflow streak that had drawn in over $1 billion into the funds.
The majority of outflows came from Fidelityβs FBTC, which saw $177.64 million exit the fund, followed by ARK and 21sharesβs ARKB, which logged $50.75 million in outflows. VanEckβs HODL and Bitwiseβs BITB also contributed to the negative momentum, with $8.63 million and $5.54 million withdrawn by investors, respectively.
Grayscaleβs GBTC Sees Rare Inflow
Grayscaleβs GBTC saw a rare inflow of $8.02 million, its first since January 17. Notably, on most previous trading days, it recorded either outflows or zero flows, accumulating a net outflow of $21.88 billion since its launch due to its higher fees compared to other ETFs.
Trading Activity Surges
Despite significant outflows, Bitcoin ETFs saw a surge in trading activity, with daily volume rising to $5.88 billion from $3.45 billion the previous day.
Market Reaction to Trade War Fears
The outflows from Bitcoin ETFs followed the announcement of new tariffs on Canada, Mexico, and China, set to take effect on Tuesday. The market reaction fueled fears of a global trade war, leading to the global crypto market briefly shedding over $500 billion in value and witnessing over $2 billion in liquidations in the derivatives market.
Following the news, Bitcoin dropped from around $105,000 on January 31 to a three-week low of $91,441 on February 3, as the broader crypto market declined nearly 10%, with most major cryptocurrencies recording losses of around 20%.
Recovery and Speculation
However, the leading crypto asset managed to recover some of its losses, briefly surging past $100,000 on February 4 before settling at $99,047 as of press time. The recovery followed an agreement between Trump and the presidents of Mexico and Canada to suspend the tariffs for one month.
Meanwhile, on Monday, Trump signed an executive order mandating the creation of a sovereign wealth fund within the next year. The crypto community speculates that the US may use the fund to purchase Bitcoin.
Key Takeaways:
- Spot Bitcoin ETFs in the US saw a shift to outflows on February 3.
- The majority of outflows came from Fidelityβs FBTC and ARK and 21sharesβs ARKB.
- Grayscaleβs GBTC saw a rare inflow of $8.02 million.
- The global crypto market briefly shed over $500 billion in value due to trade war fears.
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