Investors withdrew over $500 million from BlackRock's iShares Bitcoin Trust (IBIT), marking the fund's largest single-day redemption since its launch. This move deals another blow to the already fragile digital asset market.
Data compiled shows that BlackRock's ETF saw outflows of $523 million on Tuesday, setting a record for the fund and extending its net redemptions to a fifth consecutive day.
The withdrawals coincided with a sharp decline in Bitcoin's price. After hitting an all-time high in October, Bitcoin has fallen nearly 30%, dropping to its lowest level since April on Tuesday. By early Wednesday in New York, Bitcoin slightly recovered to around $91,628, after briefly dipping to $89,232 the previous day.
As the world's largest cryptocurrency, Bitcoin—and the broader crypto market—has yet to recover from the October 10 "crash," which saw roughly $19 billion in leveraged positions liquidated. On Wednesday, Ether traded flat, while XRP, Cardano, and Dogecoin fell between 1% and 3%.
Bitcoin's drop below key support levels on Tuesday left investors in all 12 U.S. spot Bitcoin ETFs in the red. Since early November, these funds have seen total outflows exceeding $3 billion, with IBIT alone accounting for nearly $2 billion in redemptions. BlackRock has not immediately responded to requests for comment.
As the largest spot Bitcoin ETF, IBIT has been a favorite among investors since its January 2024 debut. The fund currently manages over $72 billion in assets, with inflows nearing $26 billion this year. However, sustained outflows in recent weeks have been interpreted as a bearish signal.
Dilin Wu, a research strategist at Pepperstone, noted, "ETF outflows, combined with long-term holders selling, have tightened market liquidity, driving Bitcoin's short-term decline and highlighting weakening confidence."
Sean Dawson, head of research at crypto options platform Derive.xyz, observed that many traders are buying downside protection against Bitcoin falling to $80,000 by December 26. He added, "Concerns about U.S. job market resilience persist, and the probability of a December rate cut has dropped to just above 50%. In this macro environment, few factors support a bullish stance for traders heading into year-end."