Bitcoin ETF Sees Record Outflows Amid Volatility
Bitcoin ETFs saw outflows of $348M on March 6, the largest since February, sparking fears of a "bull trap" among traders. The volatility comes as Bitcoin’s correlation with stocks reaches its highest level in months, tying crypto price swings more closely to the broader market.
The March 6th withdrawals were spread across the entire market, with no spot Bitcoin ETF recording a net inflow. The largest exits came from two of the biggest players in the space: Fidelity's Wise Origin Bitcoin Fund (FBTC) which lost approximately $159 million, and BlackRock's iShares Bitcoin Trust (IBIT), which saw about $143.5 million withdrawn. This institutional sell-off coincided with a significant price correction for Bitcoin, which fell from a peak near $74,000 to around $68,110. The outflow marked the second straight day of withdrawals from the funds, a notable shift from the consistent inflows seen since their approval in early 2024. The broad retreat from crypto-linked funds extended beyond Bitcoin. On the same day, Ethereum ETFs also experienced substantial selling pressure, with combined net outflows reaching approximately $82.9 million. Investor sentiment soured sharply amid the volatility, with the Crypto Fear and Greed Index plummeting to a score of 12, indicating "Extreme Fear" in the market. This marked a clear shift in short-term trader confidence, as large wallet holders were observed selling into the recent price rally while smaller retail investors increased buying. The price action reinforced Bitcoin's tightening relationship with traditional finance, as its 30-day correlation coefficient with the S&P 500 surged to 0.74, the highest level recorded this year. This lockstep movement challenges the narrative of Bitcoin as a "digital gold" or a hedge against market downturns, showing it behaving more like a conventional risk asset.
