US Spot Bitcoin ETFs See Over $3.5B in Net Outflows in February

In February, spot Bitcoin exchange-traded funds (ETFs) in the United States recorded their highest-ever monthly net outflows, totaling over $3.5 billion, marking a stark contrast to the previous month’s inflows of $4.8 billion. According to data from SoSoValue, the 12 Bitcoin ETFs experienced a significant shift in investor sentiment, with February witnessing the largest outflows ever seen in a single month since their inception.

The month began positively for Bitcoin ETFs, with net inflows of $203.54 million during the first week, extending a five-week streak of positive momentum. However, this optimism quickly reversed as investor sentiment soured in the following two weeks. In each of these weeks, outflows exceeded $500 million. The situation worsened during the final week of February, from February 24 to February 28, when the ETFs saw their highest weekly outflows of $2.61 billion, marking a significant drop in investor interest.

The most severe outflow occurred on February 25, when Bitcoin ETFs experienced a record $1.14 billion in net outflows in a single day. Despite this, the trend turned briefly positive on February 28, with net inflows of $94.34 million, mostly driven by ARK 21Shares’ ARKB, which attracted $193.7 million, and Fidelity’s FBTC, which brought in $176.03 million. However, these gains were partially offset by $244.56 million in outflows from BlackRock’s IBIT.

This dramatic shift in investor sentiment came as Bitcoin experienced a significant downturn, falling roughly 28% from its all-time highs by March 2, marking its largest monthly drop since June 2022. The drop wiped nearly $1 trillion from the overall crypto market. The outflows were led by Fidelity’s FBTC, which alone saw over $1.4 billion in withdrawals. Factors contributing to this decline included former President Donald Trump’s aggressive trade policies, which raised concerns about economic instability, and persistent inflation, which prompted investors to move away from riskier assets.

Additionally, the crypto market was impacted by significant events, including the theft of nearly $1.4 billion from Bybit, marking the largest crypto theft in history. Speculative memecoins also caused substantial losses among traders, further weakening confidence in the market.

However, the negative trend reversed after former President Trump announced plans to create a U.S. Strategic Crypto Reserve, which will include Bitcoin and Ethereum, among other cryptocurrencies. This news helped fuel a short-term rally, with Bitcoin surging 8.1% in the 24 hours following the announcement, reaching $92,980 after dipping below $80,000 earlier in the week. Ethereum, which had also been struggling, saw a 9.5% increase in its value.

Federico Brokate, head of U.S. business at 21Shares, highlighted the potential significance of Trump’s announcement, noting that the creation of a U.S. Crypto Strategic Reserve represents a key step in the government’s engagement with the crypto industry. He also emphasized that the inclusion of multiple blockchain protocols demonstrates the diverse utility of blockchain networks, from tokenization to global payments. Brokate believes that this move positions the U.S. to lead the next phase of crypto adoption and innovation.