Key Insights:
- BlackRock transferred 3402 BTC and 15108 ETH to Coinbase following ETF outflows.
- U.S.-listed Bitcoin and Ethereum ETFs posted heavy redemptions this week.
- Market pressure increases as the risk of a shutdown and institutional selling rises.
BlackRock Bitcoin and Ethereum sell-off activity accelerated this week after the world’s largest asset manager transferred thousands of coins to Coinbase, following notable outflows from its spot crypto exchange-traded funds.
ETF Outflows Surge as On-Chain Transfers Signal Selling Pressure
On-chain data from Arkham indicates that BlackRock moved 3,402 Bitcoin, valued at approximately $227 million, and 15,108 Ether, valued at approximately $29.5 million.
The transfers occurred amid sustained ETF redemptions and as lawmakers in Washington failed to reach a funding agreement before a government deadline, raising the likelihood of another partial United States government shutdown.
According to SoSoValue data, the spot Bitcoin ETF from BlackRock, IBIT, recorded outflows of $157.56 million, while the Ethereum ETF, ETHA, recorded outflows of $29 million. These figures align with wider industry data showing daily net outflows across U.S. spot crypto ETFs on February 12.
Moreover, Aggregate data indicate that spot Bitcoin ETFs collectively experienced net outflows of $410 million amid an institutional sell-off. Ethereum ETFs recorded $113 million in net redemptions over the same period.
The data provided by Farside Investors also notes that Bitcoin ETFs had recorded two days of inflows at the start of the week, before reversing and registering outflows of $276 million on Wednesday and $410 million the following day.
Nevertheless, the same trend was observed with Ethereum ETFs, which registered small inflows at the beginning of the week and saw $129 million in exits on Wednesday, followed by another $113 million on Thursday. The BlackRock Bitcoin and Ethereum sell-off comes as both posted modest weekly gains of about 2.5%.
On-Chain Transfers and Market Pressure
Arkham’s blockchain data show that BlackRock’s transfers of Bitcoin and Ether were directed to Coinbase, a move typically associated with liquidity preparation or asset sales.
The 3,402 BTC transfer, valued at $227 million, and the 15,108 ETH transfer, valued at $29.5 million, followed directly after ETF redemptions from IBIT and ETHA.
Additionally, the broader market environment remains under pressure. On-chain analytics firm Glassnode has highlighted a weakness in Bitcoin’s price action.
Bitcoin began declining from above $80,000 around the start of the last partial U.S. government shutdown on January 31. Since then, the asset has fallen as low as $60,000 and has not regained the $80,000 level, according to CoinMarketCap.
Source: CoinMarketCap
Kaiko Research reported that Bitcoin’s sharp drawdown to $59,930 may represent a critical “halfway point” in the current bear market cycle. The firm noted that markets are now at an inflection point that could call into question the validity of the four-year cycle theory.
Government Shutdown Risk Adds Uncertainty
The BlackRock Bitcoin and Ethereum sell-off is unfolding as Congress approaches another funding deadline without a finalized agreement, increasing the probability of a partial government shutdown.
The previous shutdown was completed less than two weeks ago. At that time, cryptocurrency prices dropped significantly, mirroring the decline of Bitcoin, which had risen to over $80,000.
In the meantime, the government of Bhutan has also been shedding its Bitcoin assets over the past few weeks. Since the October 10 crypto market crash, Bhutan has reduced its BTC holdings by almost 60%. This decline is part of the list of institutional and sovereign bodies that have shifted in the downturn.
Standard Chartered Bank of Wall Street has also changed its prospects. The bank estimated that Bitcoin would fall below $50,000 before stabilizing. The institution had lowered its end-of-year goal of $150,000 to $100,000 due to the persisting downside risk.
BlackRock Expands Into DeFi Amid Market Weakness
Although BlackRock’s Bitcoin and Ethereum sell-off traffic and ETF redemptions have declined, the asset manager has also increased its participation in decentralized finance.
BlackRock made its first official appearance on Uniswap this week, with its USD Institutional Digital Liquidity Fund, also known as BUIDL, being listed on the platform.
Under the partnership, BlackRock will purchase an undisclosed percentage of the Uniswap governance token, UNI. Securitize CEO Carlos Domingo indicated that the action would allow institutions and approved investors to trade tokenized real-world assets, such as BUIDL, through decentralized infrastructure without losing the self-custody of their assets.
