Economist Warns ETF Outflows Could Pressure Bitcoin Down

Peter Schiff, an economist, warns that Bitcoin (BTC) might suffer from downward price pressure caused by the outflows from Bitcoin ETFs. Following withdrawals from Bitcoin ETFs, Schiff’s statements point to the possibility that this could have an adverse impact on Bitcoin’s price performance.

Bitcoin ETF Outflows Raise Concerns

Bitcoin ETFs have seen outflows over the past weeks. Over the past ten days, data shows U.S. Bitcoin ETFs with cumulative outflows of $230 million, as reported by Coingape. Market participants, especially Schiff, a Bitcoin critic, have started to worry about a possible bearish influence of this trend on the price.

When the #BitcoinETFs launched four months ago there were no sellers, only buyers. But now that so many investors own the ETFs, the supply of potential sellers is large. But with waning demand from new buyers, ETF outflows will soon put significant downward pressure on #Bitcoin.

— Peter Schiff (@PeterSchiff) May 10, 2024

Aligning with the economist’s view, on May 1, Bitcoin ETFs witnessed their largest single-day outflow, with $563.7 million being withdrawn. This outflow coincided with a 5% drop in Bitcoin’s price from $63,000 to below $60,000.

The initial excitement upon the release of Bitcoin ETFs, which brought an excessive number of buyers, has now turned into an enormous potential seller pool, according to Schiff, which has increased the risk of further price decreases.

Market Imbalance and Investor Sentiment

The introduction of Bitcoin ETFs in January 2024 led to a market characterized by excess demand and limited supply, as many investors were interested in buying. The possibility of selling pressure, nevertheless, rose when more investors started buying Bitcoin ETFs.

Schiff, as a result, indicates that the present market imbalance, with many people owning ETFs and a lack of interest from new buyers, can significantly push Bitcoin’s price downwards.

The change in market dynamics, moreover, is well reflected in the outflow data. The Bitcoin ETF market’s major player, Grayscale’s GBTC ETF, made $43. Another selling day involved 4 million outflows, adding to the negative sentiment.

However, other ETFs, such as BlackRock’s IBIT and Fidelity’s Wise Bitcoin ETF, showed positive inflows, pointing to diverse investor sentiment in various ETF products.

Inflows in the Bitcoin ETF Market

However, BlackRock’s IBIT ETF witnessed a resurgence in inflows, with $14.2 million recorded recently, in contrast to Grayscale’s outflows. This trend indicates that while some investors are exiting their positions, others are still confident in Bitcoin’s long-term prospects.

In addition, Fidelity’s Wise Bitcoin ETF (FBTC) saw $2.7 million in inflows, and Bitwise’s BITB ETF attracted $6.8 million, suggesting that investor interest remains diversified across different ETFs.

Moreover, other ETFs, such as Ark 21shares (ARKB), WisdomTree’s BTCO, and Franklin Templeton’s EZBC, also experienced positive movements. ARKB saw $4.4 million in inflows, and BTCO and EZBC registered $2.2 million and $1.8 million, respectively.  

Bitcoin Price Performance Amid ETF Outflows

In conjunction with the overall negative sentiment from ETF outflows, Bitcoin’s price has shown a bearish shift. On Friday, Bitcoin retraced below $63,000,  down by 2.48% to $60,819.35, with a market valuation of $1.20 trillion. The 24-hour trading volume for Bitcoin surged by 6.50% to $27.06 billion, indicating robust trading activity.

BTC/USD 24-hour price chart (source: CoinMarketcap)

According to Coinglass data, the recent price dip can be partly attributed to the increased crypto liquidations, which reached $145M. Concurrently, the BTC’s market capitalization has dipped by 2.51% to $1,197,748,552,399.

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