Why Bitcoin ETFs with ‘zero flows’ are not what you think

Zero flow days for BTC exchange-traded funds (ETFs) are completely normal and should not be misinterpreted as a failure of the products themselves, according to Bloomberg ETF analyst James Seifert.

On most days, the “majority” of all U.S. ETFs post zero returns — completely normal for any ETF in a given sector, Seifert said in an April 16 X post.

“On any given day, most ETFs will have a zero flow number – this is very common. There are ~3,500 ETFs in the US and yesterday, 2,903 of them had exactly zero flow.”

Several market analysts have expressed concern about the low flows in US-based Bitcoin ETFs. BlackRock's Bitcoin ETF was the only one to see gains for two consecutive trading days this week — between April 12 and April 15.

Seifert said the flows were not a cause for concern and that how new income streams are recorded was normal for most ETFs.

ETFs must create or liquidate new fund shares issued in “creation units” where there is a sufficient imbalance between supply and demand to record new income or outflows, Seifert said.

This happens only when there is an imbalance in supply. [and] Desire. And that mismatch should be enough to tap the underlying market and warrant more mismatches from the creation segment, Seifert added.

Creation units are the “lots” in which ETF shares are created and redeemed.

“Each ETF can have a different amount of creation units. Bitcoin ETFs on the spot are blocks of stocks ranging from 5,000 shares to 50,000 shares.

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Over the past six trading days, four out of ten U.S. venues have seen net inflows of Bitcoin products, with sales from the Grayscale Bitcoin Trust (GBTC) far outpacing inflows into the new funds.

Previous April 16 ETF outflow data from Farside Investors shows that GBTC experienced $79.4 million in outflows. So did the ARK 21Shares Bitcoin ETF (ARKB), which saw $12.9 million in spending.

On April 14 and 15, all ETFs combined saw net inflows of $55.1 million and $36.7 million, respectively.

The latest net outflow of Bitcoin ETFs follows a multi-day price action down 7.8% on the week to $63,723, according to TradingView data.

Traders and market analysts have pointed to geopolitical tensions in the Middle East as well as the upcoming Bitcoin halving event – currently scheduled for April 20 – as the main drivers of volatility.

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