There were intense outflows in spot Bitcoin ETFs in the USA this week. As the general level of fear in the markets increases, Bitcoin price continues to struggle to maintain strong support levels. It seems that a cautious atmosphere prevails in the market as the risks arising from leveraged transactions decrease.
Global Fund Flow and the Situation in the USA
Products offered by giant financial institutions such as BlackRock and Fidelity in US-based spot Bitcoin ETFs have been experiencing net outflows in recent weeks, contrary to the intense demand seen towards the end of the year. In particular, BlackRock’s IBIT fund recorded an outflow of more than $1.3 billion in the last week. This development points to a significant risk-reducing trend in institutional capital directed to funds through consultancy firms.
Differentiating Investor Perception in Europe
The recent outflow was not limited to the US market only. While crypto asset funds around the world experienced outflows for four consecutive weeks, a total of approximately 3.8 billion dollars of investment was withdrawn in one month. However, CoinShares research manager James Butterfill points out a different picture outside the US. Inflows, albeit modest, continue to be seen in products based in Germany and Switzerland. Butterfill evaluated this situation as follows:
While a negative atmosphere continues in the US market, it is observed that some investments in Europe are less affected by the current price movements.
The more positive outlook in Europe is due to some differences specific to investor profiles and market structures.
Peak Fear Level in the Market
The Crypto Fear and Greed Index remained stable in the “Extreme Fear” zone throughout February. The index dropped to 8 out of 100. This reflects the lowest market confidence recorded in recent years. According to analysts, this drastic change is the result of a structural shock triggered by the closure of leveraged positions and forced risk reductions in the crypto ecosystem.
According to DeFi Planet; Extreme fear in the crypto industry often follows significant security or regulatory issues. Currently, regulators in the US state of Nevada have tightened their legal fight against prediction market platform Kalshi. The civil suit, filed by the Nevada Gaming Control Board after a federal appeals court allowed state oversight of sports-based contracts, alleges that Kalshi offered unlicensed betting activities and violated applicable state laws.
Experts state that such regulation-related developments and large price fluctuations directly affect investor confidence.
As a result, there are large-scale capital outflows from Bitcoin ETFs in the US, while more measured interest remains in Europe. While the fear index being at low levels increases the tension in the markets, the impact of the steps taken by the regulatory authorities on the sector is closely monitored.
