Investors withdrew roughly $523 million from BlackRock’s flagship iShares Bitcoin Trust on Tuesday, marking the fund’s largest single-day redemption since its launch, according to data from Farside Investors.
The outflows come as bitcoin, a bellwether for cryptocurrency markets, slipped below $90,000 this week, its lowest level in seven months.
IBIT, the largest spot bitcoin exchange-traded fund (ETF), has attracted strong investor demand since its January 2024 debut, playing a central role in the crypto ETF boom. Peak inflows were recorded in late October, shortly after bitcoin surged to record highs, when the fund saw daily additions exceeding $600 million. Tuesday’s redemptions represent a sharp reversal, underscoring the severity of the selloff in bitcoin and the volatility in risk assets more broadly.
However, gold has remained resilient over the same period, prompting analysts to question bitcoin’s status as a hedge or alternative to traditional safe-haven assets. Some note that investors appear to be shifting allocations from bitcoin to gold amid growing caution.
“The crypto market entered a hangover in August,” said Thomas Perfumo, Kraken’s Global Economist, noting that much of the prior demand was driven by borrowed money. “Momentum seemingly peaked during the summer. But the truth is this hangover trend started months ago,” he added.
Analysts also point to profit-taking by long-term holders and increased caution among bitcoin treasury firms, which had aggressively purchased bitcoin earlier in the year. Brian Vieten, research analyst at Siebert Financial, said these treasury companies bought nearly $50 billion of bitcoin over the past year.
“Recently, many of these firms have begun trading at a discount to net asset value, which weighs on near-term market expectations for net new bitcoin purchases by these firms,” he said.
The retreat occurs amid wider investor concern about stretched valuations across asset classes. “An ongoing lack of speculative spirits is weighing on bitcoin,” said José Torres, senior economist at Interactive Brokers, highlighting the caution rippling through markets as investors reassess previously high valuations.
IBIT, which now manages over $73 billion in assets, has fallen 19% quarter-to-date, emphasizing both the fund’s exposure to the crypto market’s sharp swings and the sensitivity of even major institutional products to sudden sentiment shifts. Compared with the late October inflows, which propelled the fund to record daily gains, Tuesday’s withdrawal highlights a dramatic shift in investor behavior in just a matter of weeks.
Given the current market trajectory, some analysts believe that attention will turn to institutional treasury purchases, retail adoption, and regulatory developments, all of which will be critical in shaping near-term market trends for the cryptocurrency. The contrasting performance of IBIT during peak inflows versus the current redemptions underpins the crypto market’s volatility – creating anticipation for further downturn.
