Bitcoin ETF: Two Consecutive Weeks in the Green

A silver lining after the deluge. For the first time since early May, U.S. spot Bitcoin ETFs have recorded two consecutive weeks of net inflows, totaling $273.1 million. This is a welcome breath of fresh air after two months of hemorrhaging. However, before popping the champagne, a look back at the history of gold ETFs is necessary: a nine-year desert crossing that ended in new heights.

Key Points

• $273.1 million in net inflows over two weeks, the first since early May, compared to $8.2 billion in outflows over eight weeks
• June remains the worst month in the history of spot Bitcoin ETFs with approximately $4.5 billion in withdrawals
• Eric Balchunas compares the trajectory of IBIT to that of GLD, the gold ETF that took nine years to recover from its 2011 peak
• Citigroup lowers its Bitcoin target to $82,000 and no longer expects any net inflows into ETFs over the next twelve months

Two Weeks of Green, Eight Weeks of Red

The 13 U.S. listed spot Bitcoin funds captured $75.7 million in net inflows for the week ending July 17, according to data from SoSoValue. This adds to the $197.4 million amassed the previous week. When inflows exceed outflows, the reading is simple: investors are buying more shares than they are selling, hence acquiring more Bitcoins than they are relinquishing.

The figure is impressive until one takes a step back. From mid-May to early July, these same funds experienced eight consecutive weeks of outflows, with over $8.2 billion evaporated. The single month of June saw approximately $4.5 billion flee, an unprecedented event since the inception of these products. The current rebound thus represents 3.3 cents recovered for every dollar lost. Even this green week was shaky: on Monday, $424.7 million left the funds in a single session, the largest daily withdrawal since late June, amid a resurgence of military escalation between the U.S. and Iran. The following four sessions reversed the trend and salvaged the weekly balance.

These 13 funds are ETFs, publicly traded products that hold Bitcoin on behalf of their subscribers, without the need to manage a wallet themselves. Launched in early 2024 after years of refusal by the SEC, the U.S. stock market regulator, they started with a bang and drained billions of dollars in fresh capital into the market. The bearish turnaround in recent months has reversed the mechanics: heading for the exit.

The Ghost of Gold Hangs Over IBIT

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, published a valuable reading grid for current holders on July 17. His argument: the 22 years of history of GLD, the first gold ETF listed in the U.S., constitutes the best roadmap available. The parallel rests on a structural point. Bitcoin and gold are stores of value without yield: no dividends, no profits, no state guarantees. Their price depends on a single variable, demand, hence an extreme sensitivity to market mood swings.

GLD amassed $1 billion in assets in three days at its launch in 2004, an absolute record at the time. In August 2011, with gold above $1,900 an ounce, the fund briefly surpassed SPY, the largest equity ETF in the world, to become the largest ETF on the planet for a day. The subsequent journey was less glorious: gold fell nearly 45% until the end of 2015, with no new dollar records before the summer of 2020. Nine years of purgatory.

Balchunas sees a spiritual parallel with IBIT. BlackRock's ETF crossed the $100 billion mark in assets last October, almost exactly when Bitcoin reached its all-time high above $126,000. Since then, the king of cryptos has lost about half its value and trades around $64,000.

Citigroup Does Not Bet on Redemption

Not all banks share this patience. At the beginning of July, Citigroup lowered its 12-month target for Bitcoin from $112,000 to $82,000 and revised its forecast for net inflows into ETFs for the coming year from $10 billion to zero. The bank cites negative flows, stalled crypto legislation in Washington, and waning institutional appetite as reasons.

The raw numbers speak for themselves, at least in the short term. IBIT has sold nearly 100,000 BTC in recent months to honor redemptions and now holds just over 733,000. The cumulative assets of the 13 funds have fallen to $77.7 billion, down from over $106 billion just before the outflows began in mid-May.

Balchunas, however, focuses on the end of the story: two steps forward, one step back, he writes, as each cycle of gold ETFs has ended with new peaks after the crash. Long-term holders can add their own statistic. A 50% pullback seems almost like a mild winter compared to the -84% of 2018 and -77% of 2022, two episodes that were each followed by historical records. Gold took nine years to regain its 2011 peaks. Bitcoin, so far, has never taken more than four years to reclaim its own, and less each cycle.

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