Institutions Fleeing One After Another? Iran Shock Rocks Bitcoin ETF Market

▲ BlackRock Bitcoin/ChatGPT generated image ©

The Bitcoin (BTC) spot ETF market is shaking as institutional capital outflows overlap with Middle East risks. However, with BlackRock's IBIT still holding over 800,000 BTC, the market is also focused on the 'possibility of a rebound after correction'.

According to investment media outlet TradingNews on May 26 (local time), the U.S. Bitcoin spot ETF market recorded a total net outflow of $1.256 billion over five trading days from May 18 to 22. This is the third-largest capital outflow this year. In particular, BlackRock's iShares Bitcoin Trust (IBIT) saw approximately $1 billion in outflows during the same period, with a maximum daily net outflow of $448 million.

Nevertheless, IBIT still holds over 800,000 BTC, and its assets under management (AUM) remain at approximately $62 billion. The media explained that BlackRock sold approximately 13,000 BTC in response to ETF redemption requests, but this accounts for only about 1.6% of its total holdings. There was also an analysis that the ETF capital outflow was not "institutions abandoning Bitcoin" but rather mechanical selling due to the redemption structure.

The key variable that shook the market sentiment was the macroeconomic environment. TradingNews reported that international oil prices soared to $108-110 per barrel due to U.S. inflation pressures and the aftermath of the Iran conflict, and U.S. Treasury yields also surged, dampening risk asset appetite. In particular, the weakening expectations for interest rate cuts by the Federal Reserve (Fed) led some institutional capital to shift to the Treasury market, which resulted in ETF outflows.

However, there is also an assessment that the long-term trend itself remains robust. The cumulative net inflow into the U.S. spot Bitcoin ETF market has reached $58.72 billion since its launch, with IBIT accounting for approximately 70% of the total market inflows. Bank of America also reportedly holds approximately $37 million worth of IBIT shares. Grayscale's Jon Lynch projected that the annual net inflow into the Bitcoin ETF market could reach up to $15 billion this year.

During the period of ETF outflows, Bitcoin's price dropped to $74,300 but has since rebounded to around $76,000. The market is closely watching the progress of future U.S.-Iran negotiations, the June U.S. Federal Open Market Committee (FOMC) meeting, and the Consumer Price Index (CPI) announcement. The media analyzed that if expectations for interest rate easing and geopolitical risk mitigation occur simultaneously, there is a possibility that ETF capital inflows will revive.

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