Heavy Outflows From Top Bitcoin ETF Might Have Powered BTC Crypto Crash

The largest Bitcoin (BTC) spot exchange-traded fund has shredded nearly half of its assets under management recently, and this is being associated with Saturday’s Bitcoin (BTC) crypto crash.

The Norway-based Arcane Research highlights that The Purpose Bitcoin ETF witnessed an outflow of 24,510 Bitcoin (BTC) on Friday, which is the most serious redemption within a day since the fund made an entry at the Canadian Stock Exchange in April 2021.

These outflows signify that the fund had to sell approximately $500 Million in BTC On Friday, which might have added to the selling pressure in an already wobbling crypto market.

According to the Arcane analyst, Vetle Lunde cited in the report, the immense outflows are nearly caused by a forced seller in a high liquidation. And that the forced selling of the 24,000 BTC may have powered BTC’s movement towards $17,600.

The flagship crypto asset, Bitcoin (BTC) slumped below the $20,000 mark at weekend. And this caused great fears in the crypto space causing insolvencies. For instance, Celsius network, the crypto lender suspended client withdrawals. Additionally, BlockFi seeked further financing and Three Arrows Capital reported that it has faced heavy losses.

The Purpose Bitcoin ETF was the largest Bitcoin-focused exchange-traded product, managing approximately 48,000 BTC prior to Friday redemptions. And currently, the fund holds just 23,300 BTC.

Furthermore, the 3iQ CoinShares Bitcoin ETF, which is another Bitcoin-focused fund, witnessed high outflows in May when it sold 7,401 BTC from its holdings.

The Purpose Bitcoin ETF Lost Its Top Position

Due to the outflows of the recent week, the Purpose Bitcoin ETF lost its top spot which is now replaced by the New York Stock Exchange-listed ProShare Bitcoin Strategy (BITO) ETF, which holds BTC futures rather than spot BTC.

Vetle Lunde wrote in the report that the contrast highlights that a bunch of US investors are looking at the current sell-off as an attractive point of entry, benefitting from the forced sellers for a short-term relief rally.

The recent crypto crash has affected the cryptocurrencies and the related entities highly with some facing hard times and some still standing firm. It is to look forward to what way the market would take further.

As of writing, the largest crypto asset BTC is exchanging hands at $20,470 with a market cap of $390,444,747,342 and is down by around 3% in the last twenty-four hours.

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