“Huge outflows” from Bitcoin’s largest ETF may have caused BTC to collapse

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The world’s largest traded bitcoin exchange (BTC) lost half of its assets under control last Friday, which could have exacerbated the bitcoin crash on Saturday.

The Purpose Bitcoin ETF hit 24,510 bitcoins on Friday, the most serious ounce in a day since the fund debuted in the Canadian stock market in April 2021, according to Norway-based Arcane Research.

The outflows mean the fund had to sell about $ 500 million in BTC at Friday’s price, adding to the selling pressure in an already shaky crypto market, Arcane wrote in a report.

“The huge outflows are most likely caused by a forced seller in a huge liquidation,” wrote Arcane analyst Vetle Lunde. “The forced sale of 24,000 BTC could have caused the BTC to drop to $ 17,600 this weekend.”

The Purpose Bitcoin ETF saw an outflow of 24,510 BTC last Friday, losing half of its managed assets in one day. (Arcane Research)

Bitcoin (BTC) fell below $ 20,000 on Saturday, falling to $ 17,678. Traders were shocked by fears of insolvency in the cryptocurrency industry as cryptocurrency lender Celsius Network halted customer withdrawals, BlockFi sought additional funding and crypto hedge fund Three Arrows Capital confirmed it had suffered major losses.

The weekend price movement also marked the first time that the largest cryptocurrency fell below the all-time high of its previous cycle, which occurred in December 2017, of $ 19,783.

ProShares Futures ETF takes over as the largest

Bitcoin ETFs monitor the value of bitcoin and provide a way to invest in the largest cryptocurrency without being directly related to cryptocurrencies. can be bought, sold and traded on traditional stock exchanges instead of cryptocurrency trading platforms. ETFs actively add and sell bitcoin to match investors who invest and cash out of the fund.

The Purpose Bitcoin ETF was by far the largest bitcoin-focused trading product, managing nearly 48,000 bitcoins before Friday’s redemptions. Now, the fund holds only about 23,300 BTC.

Another bitcoin-focused mutual fund, the 3iQ CoinShares Bitcoin ETF, suffered large outflows last month, selling 7,401 BTC from its holdings.

As a result of last week’s outflows, the Purpose Bitcoin ETF lost its number one spot on the New York Stock Exchange ETF ProShares Bitcoin Strategy (BITO), which holds bitcoin futures contracts instead of bitcoin spots.

BITO saw its second-largest net inflows last week since its release last October, boosting the bitcoin mutual fund exposure by 4,115 BTC. The data show that the fund manages $ 668 million in assets, equivalent to approximately 31,500 BTC.

The contrast suggests that “at least some U.S. investors see the current sell-off in BTC as an attractive entry point, taking advantage of forced traders,” for a short-term relief rally, Lunde wrote in the Arcane Research report.

Overall, bitcoin-managed cryptocurrencies made $ 28 million in inflows last week, seemingly taking advantage of weak prices, cryptocurrency provider CoinShares said Monday.

“Opinion among investors is extremely polarized, with some seeing this as a great buying opportunity, while others are terrified of liquidating positions,” James Butterfill, head of research at CoinShares, told CoinDesk in an email. “Capital flows are likely to remain mixed.”

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