BlackRock’s Bitcoin ETF Experiences Outflows on U.S. Election Day

BlackRock’s spot Bitcoin exchange-traded fund (ETF), iShares Bitcoin Trust (IBIT), faced a notable outflow of $44.2 million on November 5, marking its sixth net outflow day since launching in January. This outflow, coinciding with the U.S. presidential election, signals a risk-off sentiment among institutional investors during this politically charged time.

Risk-Off Sentiment as Election Day Unfolds

The election-induced uncertainty led many investors to pull back on their Bitcoin ETF positions. According to CoinGlass, this marks the first net outflow for IBIT since October 10, when $10.8 million left the fund. Across the broader landscape, the 11 U.S. spot Bitcoin ETFs collectively saw $116.8 million in outflows on Election Day, with the Fidelity Wise Origin Bitcoin Fund (FBTC) leading the pack with a $68.2 million outflow.

In contrast, the Bitwise Bitcoin ETF (BITB) was the only fund to record an inflow on November 5, attracting $19.3 million.

A Continuation of Outflow Trend for Bitcoin ETFs

The $44.2 million outflow from BlackRock’s Bitcoin ETF represents the third consecutive trading day of net outflows for U.S. spot Bitcoin ETFs. This follows the previous day’s massive outflow of $541.1 million, marking the second-largest single-day outflow for these funds in their history.

Despite these outflows, the broader cryptocurrency market, including Bitcoin, saw significant gains following the closure of U.S. markets. Bitcoin surged to an all-time high, briefly reaching $75,000, driven by the unfolding election results.

Bitcoin’s Role as an "Election Trade"

Henrik Andersson, Chief Investment Officer at Apollo Crypto, explained that Bitcoin has emerged as a key trade for global investors during the U.S. election cycle. With betting markets leaning heavily toward a potential Donald Trump victory, Andersson estimated an 80-90% probability of Trump winning, fueling speculative activity in Bitcoin.

Should Trump emerge victorious, Andersson predicted that Bitcoin could hit $100,000 by year-end, further emphasizing the cryptocurrency's role as a risk-on asset amid political uncertainty.

Election Impact on ETF Innovation

In the broader context, Nate Geraci, President of ETF Store, noted that the impact of elections on investments is often overstated. However, he pointed out that the regulatory environment, particularly the leadership of the SEC, can have a much more significant impact on the future of ETF innovation.

This underscores the ongoing relationship between politics, regulatory policies, and the investment landscape, especially for emerging asset classes like Bitcoin.

As the election results continue to unfold and investor sentiment adjusts accordingly, Bitcoin’s price volatility is likely to persist, with institutional and retail traders alike positioning themselves based on the election’s outcome. The market remains keenly attuned to political developments and their implications for the cryptocurrency ecosystem.