The Misconception Behind Bitcoin ETFs’ ‘Zero Flows’

Bitcoin exchange-traded funds (ETFs) experiencing days with no inflows is completely normal and should not be seen as a failure of the products themselves, according to Bloomberg ETF analyst James Seyffart. Seyffart explained that most ETFs, regardless of sector, typically have zero inflows on most days. Concerns were raised by market commentators about the low inflows into US-based Bitcoin ETFs, with BlackRock’s Bitcoin ETF being the only one to see inflows for two consecutive trading days. However, Seyffart stated that these flows were not a cause for concern and were typical for most ETFs, as new inflows are recorded when there is a significant mismatch between supply and demand. Creation units, which are blocks of shares, are used to create and redeem ETF shares. In the case of spot Bitcoin ETFs, creation units can range from 5,000 shares to 50,000 shares. In recent days, all ten US spot Bitcoin products have experienced net outflows, with the Grayscale Bitcoin Trust (GBTC) seeing the highest selling compared to inflows into new funds. This follows a period of subpar price action for Bitcoin, which has declined 7.8% to $63,723. Traders and market pundits attribute this volatility to escalating geopolitical tensions in the Middle East and the upcoming Bitcoin halving event scheduled for April 20.