BlackRock Bitcoin Trust Faces Record Outflows Amid Market Decline

Investors have pulled an unprecedented $420 million from BlackRock’s iShares Bitcoin Trust, marking its largest single-day outflow as Bitcoin hit a yearly low.

The sharp drop in the fund’s holdings, which saw 5,000 BTC exit on February 26, overshadowed earlier withdrawals, including a $332 million pullback in January.

This massive outflow is part of a broader trend, with nearly $3 billion leaving the market over the past week. February 26 alone accounted for $756 million in total withdrawals, according to CoinGlass data. Despite the wave of red, ETF Store President Nate Geraci believes this could be a short-term dip, and the trend might not persist.

The pullback isn’t limited to BlackRock’s fund. Other Bitcoin-focused investment products also experienced significant losses, including Fidelity’s Wise Origin Bitcoin Fund, which saw a $145.7 million exit. Many others, including Grayscale and WisdomTree, reported outflows ranging from $10 million to $60 million.

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Meanwhile, the broader crypto market continued its decline, with Bitcoin dropping to $82,455 on February 26 and the total market capitalization sinking below $3 trillion. This marks a 25% correction from December’s all-time highs, with approximately $1 trillion leaving the space.

Despite the market’s struggles, some analysts, including CryptoQuant’s Ki Young Ju, caution against panic. He pointed out that Bitcoin’s past performance shows that large corrections are not unusual during bull cycles, referencing a 53% drop in 2021. Others, like BitMEX’s Arthur Hayes, suggest the outflows are driven by hedge funds unwinding short-term positions, with many investors looking to capitalize on arbitrage opportunities rather than holding Bitcoin for the long haul. Hayes speculated that Bitcoin could fall as low as $70,000 due to the continued withdrawals.

Alexander Stefanov