(Bloomberg) — Investors have pulled a record $3.3 billion from US spot-Bitcoin exchange-traded funds in February, poised for the biggest monthly exodus since they debuted, as investors sought refuge in safer assets amid rising geopolitical tensions and persistent inflation concerns.
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The group’s net outflow came amid a slide of as much as 28% in Bitcoin from its record high on the day Donald Trump was inaugurated as president, including its steepest monthly decline since June 2022. Other cryptocurrencies have also faltered, with an index tracking top digital tokens reaching its lowest level since the US Election Day in November. In all, the rout has wiped out roughly $1 trillion in crypto market value. Fidelity Wise Origin Bitcoin Fund (ticker FBTC) has posted the biggest outflow among these funds, amounting to more than $1.4 billion.
Investor sentiment has been rattled by Trump’s combative trade policies, which have reignited fears of economic disruption. Meanwhile, stubbornly high inflation has added to the mood, fueling a selloff in risky assets. Sentiment also worsened after hackers stole nearly $1.5 billion from the Bybit exchange, the biggest theft in the history of crypto, and traders suffered big losses on highly speculative tokens known as memecoins.
“Hot money that chases Bitcoin, or any speculative trade, flows out as fast as it entered when prices start falling,” said Michael Rosen, chief investment officer at Angeles Investments. “It’s a good reminder that Bitcoin is not an investment, it is a highly speculative trade.”
While Bitcoin funds are seeing an exodus, investors added nearly $18 billion this month to SPDR S&P 500 ETF Trust (SPY), the most since December 2023 and a reversal from January’s outflow, and $6 billion into Invesco QQQ Trust (QQQ). Those flows came even as the Nasdaq 100 Index dipped as much as 7.3% from its last record on Feb. 19.
Strategists at Bank of America Corp. wrote that Bitcoin’s inability to stay above the $97,000 mark was the first sign of what they call the “bro bubble” popping.
The token had traded in a narrow range near $95,000 for most of the month before this week, after reaching a record of about $109,000 on Jan. 20.
“We are observing a notable reversal of the post-election market dynamics that had initially been driven by expectations of a pro-business, pro-market administration following candidate Trump’s victory,” said Raphael Thuin, head of capital market strategies at Tikehau Capital SCA. “Bitcoin’s struggles are further compounded by broader weakness in the tech sector.”
