Aniket Pujari
Bitcoin exchange-traded funds have held onto over 95% of their invested capital, even as inflows slow and Bitcoin’s price declines, according to senior Bloomberg ETF analyst James Seyffart.
In a Mar. 14 post on X, Seyffart shared that Bitcoin ETFs have registered declining inflows, dropping to $35 billion from a peak of $40 billion. However, with total assets under management at $115 billion, most funds remain intact despite Bitcoin’s 25% price drop.
According to Seyffart, this resilience is comparable to traditional U.S. stock ETFs, where long-term investors don’t panic sell during market downturns but instead keep buying. This investor behavior, he said, indicates a move away from short-term speculation and toward long-term wealth-building tactics.
Meanwhile, data from SoSoValue shows that U.S. spot Bitcoin ETFs have seen $870 million in outflows in the last week and $1.6 billion over the past month. Analysts say the recent outflows are a classic case of “buy the rumor, sell the news.”
The Strategic Bitcoin Reserve initiative was first mentioned by Trump in July 2024, which led to speculations and more investors buying Bitcoin. By the time the official announcement was made at the Crypto Summit, the market had already priced it in, leading to a sell-off.
Other indicators suggest Bitcoin’s market is weakening. CryptoQuant contributor Darkfost noted that Bitcoin demand has fallen sharply since December. He pointed to a drop in the 30-day simple moving average of apparent demand, which compares new supply to BTC inactive for over a year. This decline indicates fewer active buyers and a more cautious market.
https://twitter.com/darkfost_coc/status/1900253428846387242?s=46&t=nznXkss3debX8JIhNzHmzw
Another concerning trend was revealed by the data analytics platform Alphractal on a Mar. 12 X post. The Bitcoin Sharpe Ratio, which determines risk-adjusted returns, has been declining since March 2024. Even as Bitcoin hit all-time highs above $100,000, the ratio showed weakness, indicating rising risk per unit of return.
The decline can be attributed to macroeconomic uncertainty, increased volatility, and slowing short-term returns. Returns become less predictable and more volatile when the Sharpe Ratio declines, indicating increased market volatility and possible price corrections.
Additionally, Santiment’s data indicates that large Bitcoin holders are selling. In the past week, whale wallets, or those with 100-1,000 BTC, sold over 50,000 BTC totaling approximately $4.07 billion. Changes in whale and shark wallet tiers have historically affected market trends, raising more questions about the short-term prospects of Bitcoin.
