BlackRock’s Bitcoin ETF Struggles in September

Despite a modest uptick in Bitcoin prices this September, BlackRock’s iShares Bitcoin Trust (IBIT) has experienced sluggish inflows. It netted just $6.76 million for the month.

While IBIT has been stagnant, other funds faced outflows.

Bitcoin ETFs Recorded $155 Million in Outflows

BlackRock’s Bitcoin ETF – IBIT saw varied trading volumes. It recorded an inflow of $15.82 million on September 16.

However, this gain was offset by an outflow of $9.06 million a week earlier, culminating in a modest net inflow. On ten trading days this month, IBIT recorded zero netflow.

Interestingly, this occurred during a month when Bitcoin’s value increased by nearly 5%, a condition that typically fosters higher fund inflows.

Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach

Overall, the ETF sector fared similarly. September witnessed a collective outflow of around $155.30 million from all spot Bitcoin ETFs, indicating broad market hesitancy. Despite these challenges, IBIT has performed relatively well, maintaining stable inflows during notable volatility.

Amid these developments, BlackRock has shared new insights on Bitcoin. The asset management giant unveiled a report titled “Bitcoin: A Unique Diversifier,” which discusses the cryptocurrency’s potential as a diversification tool in global portfolios.

The report emphasizes Bitcoin’s unique attributes, such as its scarcity, decentralized nature, and global reach. These features enhance its appeal as a hedge against traditional financial uncertainties.

BlackRock’s analysis suggests that Bitcoin has demonstrated remarkable resilience over time.

It states that Bitcoin outperformed all major asset classes in seven out of the last ten years, with returns exceeding 100% annually over the last decade.

“This performance was achieved despite Bitcoin also being the worst-performing asset in the other three of those 10 years, with four drawdowns in excess of 50%. Through these historical cycles, it has shown an ability to recover from such drawdowns and reach new highs despite these extended bear market periods,” BlackRock said.

Moreover, the report explores Bitcoin’s role during global crises, identifying it as a safe haven asset. BlackRock highlights Bitcoin’s non-sovereign, decentralized nature, which shields it from geopolitical disruptions and economic uncertainties that impact traditional asset classes.

Read more: Who Owns the Most Bitcoin in 2024?

The discussion on Bitcoin also extends to its impact on US fiscal policies. BlackRock notes an increasing institutional interest in Bitcoin as a potential alternative reserve asset amid rising concerns over US federal deficits and debt levels. This interest is reflected globally, where significant debt accumulation has spurred similar considerations.

Despite these encouraging aspects, BlackRock advises caution due to Bitcoin’s volatility and the changing regulatory environment that could affect its adoption and valuation. The asset manager recommends that Bitcoin while presenting an intriguing investment opportunity, should be incorporated cautiously into diversified portfolios to manage its inherent risks.