BlackRock and Fidelity funds drive $643M bitcoin ETF outflow after Binance hack

On Oct. 30, the largest single-day outflow from US spot bitcoin ETFs since June 25 was $643.3 million, led by BlackRock’s IBIT and Fidelity’s FBTC.

The departures follow a $6.3 billion hack at Binance a day earlier.

Laevitas puts the outflow at under 1% of fund assets

IBIT lost $233.7 million and FBTC about $201 million. The two funds combined accounted for about two-thirds of the day’s net withdrawals.

The ARKB of Ark and 21Shares relinquished $129.55 million. Grayscale’s GBTC lost $53.3 million and Bitwise’s BITB lost $25.7 million.

Funds now retain $98.14 billion net assets. For the week ended Oct. 30, outflows totaled $202.6 million.

Last week, Cryptopolitan reported that a rebound in late October pared the month’s net outflows to about $26 million.

Ether funds saw $155.9 million in outflows on October 30, the largest single-day outflow since October 7. There was an additional $431.5 million outflow over the week.

The outflow from bitcoin funds is a sentiment shock, said ViaBTC chief analyst Jeff Ko. Ko said that spot ETF holders have no direct exposure to Binance, as the underlying bitcoin is held by regulated custodians.

Laevitas head of markets Rick Maeda said the $643 million was less than 1% of spot bitcoin ETF assets. He said it was a “de-risking day” and was not a sign of capitulation or a loss of confidence from institutions.

Steadier markets, deeper liquidity and firmer investor confidence are needed for a durable return of inflows into ETFs, said Dominick John, Zeus Research analyst. The Crypto Fear and Greed Index stood at 37, in fear territory, on Nov. 1.

Withdrawals reopen with $3.64 billion in net outflows

Hackers drained about $6.3 billion from Binance’s hot wallets on October 29 in what is the largest crypto theft to date. Binance said the breach may have started with a DevOps engineer’s compromised laptop.

The drain is ascribed to signed authorizations on a single Ethereum hot wallet, Binance 14, security firm Blockaid said.

On October 31, the FBI fingered North Korea’s TraderTraitor group for the theft. Previously, on-chain investigator ZachXBT had pointed to North Korea’s Lazarus Group.

The industry locked about $3 billion on-chain. Tether froze more than $1.567 billion in USDT and Circle froze more than $800 million in USDC.

Binance set about restoring withdrawals on November 1, reopening 15 networks and assets in its first phase. Over its first 9.5 hours, it handled $4.65 billion in withdrawals against $1.01 billion in deposits, a net outflow of some $3.64 billion.

The outflow is 2.1% of the exchange’s $171 billion in assets under management. At the time of writing, Bitcoin is currently trading at $78,138, up 0.3% in 24 hours and down 2.5% over the past seven days.

Markets would remain sensitive to headlines, with traders awaiting updates on the hack and the US midterms, Maeda said. Ko said the midterms could shape how crypto market structure legislation moves through Congress.