$1.2 billion withdrawn from US Bitcoin ETFs as London revives cryptocurrencies

The 12 spot Bitcoin exchange-traded funds (ETFs) in the US reversed sharply last week, recording net outflows of $1.2 billion.

This was the second-biggest weekly drop since the service launched in January 2024, according to SoSoValue data.

The backlash cut off a two-week period of inflows that had brought in more than $5 billion, a period many read as evidence of deepening institutional beliefs.

Investors pulled capital from nearly all major issuers, according to SoSoValue data. BlackRock’s IBIT recorded an outflow of $276 million, while Fidelity’s FBTC recorded an outflow of $169 million.

Other major issuers such as ARK Invest’s ARKB and Bitwise’s BITB lost $290 million and $128 million, respectively, while Grayscale’s two funds lost $321 million.

The reversal comes after a volatile week during the reporting period when Bitcoin briefly fell below $104,000. Notably, this was the lowest price level since June.

Industry experts have linked the drawdown to macroeconomic conditions caused by the US-China tariff war, which has shaken confidence in risk assets such as Bitcoin.

However, the flagship digital crypto asset has significantly recovered to over $110,000 at the time of writing amid recent developments in the market.

London counterattack

While US capital flows were on the defensive, another story was unfolding across the Atlantic that was reshaping retail access to Bitcoin.

On October 20th, Bitcoin Exchange Traded Notes (ETN) trading officially began on the London Stock Exchange. This marks the end of a three-year retail ban on crypto investment products in the UK.

BlackRock led the debut with the iShares Bitcoin ETP, with major issuers including Bitwise also participating.

Meanwhile, early feedback on these products is mixed but still showing promising signs.

Bytetree founder Charlie Morris said early trading activity showed “success on platforms such as Interactive Investor, Swissquote and Trading212”, but some brokers such as AJ Bell were slow to support access.

Still, Bitwise’s head of Europe, Bradley Duke, said the launch of these products will mark a “significant week” for retail investors, as “the direction of cryptocurrencies is clear.”

$600 billion inflow?

With a new wave of adoption across the Atlantic and a renewed focus on Bitcoin from institutional investors, Galaxy Research believes crypto investment products could attract up to $600 billion in new inflows as traditional financial institutions expand distribution.

According to the company, the US advisory market represents a vast and largely untapped opportunity that will drive significant inflows into BTC. It stated:

“Approximately 300,000 financial advisors manage approximately $30 trillion in client assets. If even just a 2% allocation to Bitcoin ETFs appeared across this channel, the potential inflows would equate to approximately $600 billion.”

This wave of flows would rival the entire global gold ETF market, which is currently worth about $472 billion, and four times the total assets under management (AUM) of all U.S. spot Bitcoin funds, which is $146 billion.

The asset manager said recent policy moves by large traditional financial institutions such as Morgan Stanley and Vanguard support this assertion.

Specifically, Morgan Stanley recently recommended an allocation of up to 4% to digital assets, and Vanguard is reportedly considering offering select third-party crypto ETFs to the brokerage’s clients.

These developments are expected to bring new capital into the emerging industry and further increase the adoption of Bitcoin.

Galaxy Research argued that the full opening of large-scale advisory platforms could signal a tectonic shift in how digital assets are integrated into mainstream finance.

Once fully enabled, this access will allow financial advisors to incorporate cryptocurrencies directly into traditional balanced portfolios, moving the asset class from retail-driven speculation to advisor-driven portfolio construction.