US Bitcoin ETFs Hurt by Middle East Conflicts

Amid Middle East conflicts, US spot Bitcoin ETFs experienced significant outflows, reversing an eight-day inflow streak.

On Tuesday, the net flows into the US spot Bitcoin ETFs group were negative as Bitcoin declined below $62,000 in response to the heightened tensions between Israel and Iran.

Yesterday, BlackRock’s iShares Bitcoin Trust (IBIT) was the sole gainer, generating over $40 million, as indicated by data tracked by Farside Investors. IBIT’s holdings have now exceeded 366,400 BTC, valued at approximately $23.2 billion, and its net buying has surpassed $2.1 billion since its trading launch in January.

Nevertheless, the gains of IBIT were insufficient to offset the outflows from other funds. On Tuesday, investors withdrew more than $283 million from Fidelity’s FBTC, ARK Invest’s ARKB, Bitwise’s BITB, VanEck’s HODL, and Grayscale’s GBTC.

FBTC led with $144 million worth of redemptions, while GBTC was no longer the outflow star, as the fund only lost approximately $6 million in Tuesday trading.

On Tuesday, the US spot Bitcoin ETFs experienced a net outflow of more than $242 million. This represented a reversal of an eight-day streak of net inflows that commenced on September 19.

On a day that was marked by Iran’s launch of missile attacks on Israel, which exacerbated tensions in the Middle East, the demand for Bitcoin ETFs turned red.

The value of Bitcoin began to decline immediately upon the release of news of Iran’s missile strikes. According to CoinGecko data, Bitcoin (BTC) has experienced a decline of over 3% in the past 24 hours, culminating in a nearly $4,000 drop and a low point of approximately $60,300.

BTC has marginally rebounded to $61,800; however, its divergent trajectory compared to oil and gold has prompted discussion regarding its status as a haven asset.

On October 1, gold prices rose by 1.4% to $2,665 per ounce, which is on the brink of a record high. Conversely, crude oil prices increased by 7% to $72 per barrel. In response to an airstrike on Israel, the US dollar and bonds also experienced gains.

Bitcoin prices have historically been subject to volatility due to geopolitical tensions. For instance, Bitcoin prices experienced fluctuations after the Israeli assault on Iran earlier this year.

The current situation could further influence investor behavior, which could result in additional sell-offs if the conflict escalates.

In the wake of yesterday’s missile attack, Israeli Prime Minister Benjamin Netanyahu has pledged to retaliate against Iran.

“Iran made a big mistake tonight, and it will pay for it,” Netanyahu stated during a Security Cabinet meeting.

From a neutral zone of 50 points, the Crypto Fear and Greed Index plummeted to 42 points of fear. This implies that investors are exercising greater caution amid elevated geopolitical risks.