In tune with the flow: April BTC ETP Recap

03 May 2022

In tune with the flow: April BTC ETP Recap

April saw record-breaking monthly net outflows of 14,327 BTC from BTC ETPs, surpassing the previous July record, further illustrating the poor state of the market this month.

April: Key takeaways

April saw the largest monthly net outflows in the BTC ETP history, with outflows amounting to 14,327 BTC reversing all gains seen in March.
The global bitcoin holdings of BTC ETPs shrank to 187,000 BTC by the end of the month.
All regions except Brazil saw net outflows. Brazil saw minor net inflows but remains small in a global context.
Canadian ETFs saw massive outflows in April, amounting to 7,100 BTC, or a 10% decline in BTC under management compared to the end of March.
US BTC ETFs saw their worst month since launch, seeing monthly net outflows equivalent to 3,312 BTC, with all outflows originating from BITO. The BTC exposure of US ETFs declined by 11% in April.
Europe saw outflows amounting to 3,974 BTC in April. European ETPs have seen net outflows in 10 out of 16 months since January 2021. The April outflows in European ETPs were smaller than the Canadian ETFs, leading the European dominance to increase slightly.
Crypto ETFs will soon go live in Australia. One of these ETFs will offer direct exposure, while others will hold Canadian BTC ETFs, which might be positive for Canadian ETFs.

Worst month ever for BTC ETPs

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

April saw net outflows amounting to 14,327 BTC, leading the BTC under management to decline to 187,112 BTC. While March was the strongest month since November, April swiftly erased the entire growth. These outflows go hand in hand with poor signals elsewhere in the market. The current trend seems to be a sharp de-risking, and contrary to bitcoin, gold ETFs saw their gold holdings grow by 1% in April, a further indication that gold is the preferred vehicle for hedging against uncertainty.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

April's monthly net outflow of 14,327 BTC is the largest outflow recorded in the BTC ETP history, surpassing the July 2021 net outflow of 13,849 BTC. Since January 2021, only five months have seen monthly net outflows, and the April outflows were larger than the combined net outflow from September, December, and January.

Net outflows in all regions except from Brazil

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

All regions except Brazil saw net outflows in April. European BTC ETPs saw monthly net outflows amounting to 3,974 BTC in April. Meanwhile, Canadian ETFs saw the largest monthly net outflows, amounting to 7,100 BTC. US ETFs experienced their worst month in terms of flows since launch equalling 3,312 BTC. Brazilian ETFs remain a healthy (while small) outlier, seeing their 7th consecutive month of inflows, showing a sustained demand for bitcoin exposure in Brazil.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

As of the end of April, European ETPs hold 92,561 BTC, Canadian ETFs hold 65,462 BTC, US futures-based ETFs hold the equivalent exposure of 26,859 BTC, while Brazilian ETFs hold 2230 BTC.

European ETPs back to seeing outflows, but nothing extraordinary

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Source: Bytetree

After a positive month in March, European ETPs are back in the red. Contrary to the other regions, European ETPs have seen outflows since January 2021, seeing net outflows in 10 out of the last 16 months. In the European ETP market, BTCETC and 21Shares ETPs were key contributors to the outflows. In general, flows in certificates tend to see less volatile changes in their AUM. Still, overall the Bitcoin Tracker XBT product has seen consistent outflows each month since October, suggesting that redeemable products are in higher demand.

Canadian outflows in April slightly below July levels

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Source: Bytetree

Canadian BTC ETFs experienced their largest outflows since July 2021, erasing the entire growth seen in March. The massive outflows have impacted most of the Canadian ETFs, particularly the two largest ETF providers, Coinshares and Purpose. The potential launch of two Australian bitcoin ETFs might improve the flows in these ETFs in May, as these Australian ETFs will hold their exposure through Purpose and Coinshares.

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Source: Purpose

From March 28th to March 29th, Purpose’s BTC holdings declined by nearly 5,000 BTC, making this the worst month in Purpose’s history.

By far the largest monthly net outflows in U.S. BTC ETFs brief history

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Source: Bytetree, VanEck, Proshares

April was by far the worst month in terms of outflows in the U.S. futures-based ETFs as U.S. ETF's BTC exposure declined by 3,312 BTC. This has likely contributed to the low futures premiums on CME, as solid and persistent selling pressure in these ETFs directly impacts the CME futures market.

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Source: Proshares

ProShares bitcoin exposure has approached yearly lows after persistent selling pressure throughout April. The entire growth seen in BITO this year has thus been erased, illustrating the poor sentiment in the U.S. markets. These outflows are likely related to traders positioning themselves for a tighter monetary regime.

Still slight net inflows in Brazil

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Source: Hashdex, StatusInvest

Brazil represents an outlier this month, seeing slight net inflows in April. Brazil has seen consistent net inflows in the last seven months, illustrating the growing popularity of bitcoin in Brazilian portfolios. Nevertheless, the Brazilian bitcoin ETFs remain small compared to the other regions, representing 1.2% of the global BTC ETP market.

Zooming back out: Double-digit percentage outflows

The North American BTC ETFs saw double-digit percentage outflows in April, while European ETPs saw a smaller setback of 4% outflows, increasing the European grip on the BTC ETP sector from 47.9% to 49.4%. These tendencies could suggest that North American bitcoin investors are the most active sellers in the market.

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Source: Bytetree, VanEck, Proshares, Hashdex, StatusInvest

Overall, April was a weak month in the bitcoin ETP sector, seeing the largest ever monthly net outflows recorded in the sector, breaking the previous record from July 2021. Overall, this is further evidence of the strong pessimistic grip on the market.

ETFs to be launched in Australia

Two BTC ETFs (ETF Securities and Cosmos Asset Management) were set to launch on April 27th on CBOE in Australia but were unable to launch due to ongoing standard checks. It’s rumored that this hold-up was caused by a “powerful but undisclosed prime broker” who needed more time to support the launch.

Canadian Fusion

Cosmos Asset Management intends to purchase units in the existing Purpose bitcoin ETF. News of a third ETF to be launched came later last week with 3iQ seeking to list feeder ETFs, with exposure to 3iQ Coinshares’ Toronto ETFs. The launch of these ETFs may thus lead to increased buying pressure in the Canadian ETFs, which might tame the massive outflows seen in April.

A direct alternative?

In contrast, ETF securities intend to invest in a sub-fund that directly holds bitcoin and ether. These ETFs are structured to be redeemable in crypto assets. If launched, this fund might be better positioned to gain a significant market share in Australia, based on tendencies from other regions, with investors preferring direct access to spot-based alternatives. The Australian Financial Review has referenced speculations regarding how these ETFs could attract $1bn in inflows. This seems lofty, given the current $1bn size of the U.S. BTC ETF market and the $2.6bn size of the Canadian ETF market. VanEck, Betashares, and Monochrome Asset Management are also working on setting up bitcoin ETFs in Australia. We’ll monitor the situation as it progresses.