The ARK 21Shares Bitcoin ETF (ARKB) experienced a massive $275.2 million outflow in a single trading session, the largest since August. Analysts see this as a red flag for institutional confidence in crypto ETFs. Fidelity’s FBTC also lost $132 million, indicating a broader trend of investors pulling back from the sector.

The total net outflow for all Bitcoin ETFs hit $530.9 million, signaling a significant selloff in the space. A recent $19 billion liquidation across crypto markets may have shaken investor confidence, prompting a chain reaction. The upcoming FOMC meeting could also be a factor, with any hints of policy changes potentially spooking markets.

ARKB’s reactive nature attracts short-term investors who quickly buy and sell based on market movements. The ETF usually holds 40,000 to 50,000 BTC, and major redemptions can have ripple effects on the broader market. When ETFs experience large outflows, it puts pressure on the spot market, potentially leading to more downward momentum.

Institutions’ treatment of Bitcoin as a long-term hedge or short-term trading asset remains uncertain, contributing to market volatility. The upcoming Fed meeting will be crucial in determining if ETF flows will return or if investors will continue to reduce their exposure to crypto. ETF issuers will need to closely monitor share discounts and liquidity management.

The outcome of the Fed meeting will impact whether ETF flows return or investors continue trimming their exposure to crypto. If ARKB and other ETFs can rebuild inflows, trust may be restored. However, failure to stop the bleeding could shift how institutional players view Bitcoin, seeing it as a volatile asset that requires caution in handling.

Read more at Yahoo Finance: ARK 21Shares Bitcoin ETF Sees Heavy $275M Outflows in One Day