Spot Bitcoin ETFs Retreat Amid Investor Wariness

After starting the week with a roar, spot bitcoin exchange-traded funds shed about $18 million in assets on Tuesday, a small sign of investor cautiousness on an otherwise bright day for risk-on assets.

The $11 billion Fidelity Wise Origin Bitcoin Fund (FBTC) , the third largest spot bitcoin by assets under management, incurred $49 million in outflows, the most of the 11 ETFs that track bitcoin's ongoing price, according to U.K.-based asset manager, Farside Investors. The $14 billion Grayscale Bitcoin Trust (GBTC) incurred about $9 million in net outflows, the second most. BlackRock's $23 billion iShares Bitcoin Trust (IBIT) was the only gainer, adding about $40 million in assets.

Those funds all dropped about 1.8% on Tuesday even as the S&P 500 and tech-focused Nasdaq jumped about 1% and 1.5%, respectively amid rising investor optimism that the U.S. central bank is taming inflation without casting the economy into a recession.

Spot bitcoin ETFs had generated more than $235 million in outflows on Monday after a weekend surge in the funds' underlying asset sent its price above $64,000 for the first time this month. Bitcoin has responded favorably to recent economic indicators, including last Friday's unexpectedly strong September nonfarm payrolls report. The price of the largest cryptocurrency by market capitalization has risen about 14% over the past month.

Bitcoin Soars in October

October has historically been bitcoin's strongest month with average price increases of more than 20% over the past decade. "There's always something distinctive about October, where pivotal events seem to align, driving markets upward," crypto-focused 10X Research wrote in a weekend note. "This year is likely to follow the same pattern."

The fledgling bitcoin funds, which began trading earlier this year, now manage about $55 billion in assets. Their success has helped kickstart a number of products aiming to address growing investor demand for crypto-based assets. Nine funds based on the spot price of ether, the world's second largest digital asset by market value, sustained $8 million in net outflows on Tuesday.

In texted comments to etf.com, Joe DiPasquale, the CEO of digital asset fund manager BitBull Capital. wrote that investors will be watching whether bitcoin will crack the $65,000 threshold or fall below $60,000. He noted that "although inflows have varied," the Security and Exchange Commission's approval of bitcoin ETFs "coupled with the halving of [bitcoin] mining rewards has caused increasingly upward trends for Bitcoin's price due to increased demand and decreased supply."