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Iran-Israel Tension Causing “Hesitancy Amongst Investors” But BlackRock ETF Bucks Trend With Inflows

Published April 16, 2024 1:08 PM
Teuta Franjkovic
Published April 16, 2024 1:08 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • BlackRock’s Bitcoin ETF, IBIT, bucks trend with inflows despite overall market weakness.
  • Investor caution dominates with outflows from most Bitcoin investment products.
  • Regional differences exist with some areas buying the dip while others pull out.

During a fluctuating week for cryptocurrencies, BlackRock’s iShares Bitcoin Trust (IBIT) distinguished itself by registering notable inflows, contrasting sharply with other US-based Bitcoin exchange-traded funds (ETFs).

On April 15, IBIT recorded net inflows  of $73.4 million, down from $111.1 million the previous day.

Challenges for US Bitcoin ETFs Amid Market Volatility

Despite recent geopolitical tensions  marked by Iran’s retaliation against an Israeli airbase, the impact on cryptocurrency markets has been minimal. On April 1, an Israeli F-35 reportedly launched a strike on an Iranian consulate in Damascus, leading to significant casualties including the death of two generals from Iran’s Islamic Revolutionary Guard Corps.

Iran’s subsequent missile attack on Israel’s Nevatim Air Base, a key location housing Israeli F-35s, was a direct response to the earlier incident. Yet, these escalations, while significant politically and militarily, have not notably influenced the stability or activity within the cryptocurrency markets. This indicates that, for now, crypto markets are showing resilience against geopolitical disturbances in that region.

BlackRock’s performance was significantly different from the other eight ETFs, which reported no new inflows, according to data  from Farside Investors. Grayscale’s Bitcoin Trust, however, faced considerable outflows, highlighting a broader trend of investor caution as observed in recent market activities.

The positive inflows into IBIT were not enough to offset the substantial outflows from the Grayscale Bitcoin Trust (GBTC), which saw $110.1 million leave on April 15, decreasing from $166.2 million on April 14. These outflows are part of a wider trend reflecting investor hesitancy in a market that witnessed an 11.6% decrease in Bitcoin’s price over the week to $63,410, per CoinMarketCap .

This uncertain investor sentiment comes during a week marked by geopolitical tensions and upcoming changes to Bitcoin’s blockchain mechanics.

Insight into Global Bitcoin Investment Trends

According to James Butterfill  from CoinShares, global Bitcoin investment products saw outflows of $110 million for the week ending April 12. This contributed to a total of $126 million in outflows from all digital asset investment products.

Butterfill said : “Investors are seemingly hesitant since the positive price momentum has stalled.”

He added that, while trading volumes rose slightly from $17 billion to $21 billion week-on-week, activity in ETPs and ETFs fell. They dropped from 40% of total volumes on trusted exchanges over the past month to 31% last week.

crypto inflows
Credit: CoinShares

This cautious stance was also evident regionally. The US experiencedthe largest outflows, totaling $145 million. Meanwhile, Switzerland and Canada saw smaller outflows of $5.7 million and $6 million. Conversely, Germany witnessed $29 million in inflows, as investors there took advantage of recent price dips.

BlackRock’s ETF, Bitcoin Outflows and the Response to Market Dynamics

Despite the general outflows, Bitcoin itself maintained a positive inflow  month-to-date of $555 million, with short-Bitcoin products seeing minor inflows of $1.7 million after a three-week period of outflows, possibly capitalizing on the recent price declines. This reflects a complex investor landscape, where reactions vary significantly by region and product type.

Overall, while BlackRock’s IBIT shows resilience with sustained inflows, the wider landscape for Bitcoin investment products, particularly in the US, remains fraught with challenges. External geopolitical events , coupled with developments like the upcoming Bitcoin halving, are driving shifts in investor confidence and market stability.

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