Bitcoin and Ethereum are recovering after falling to six-month lows on Monday in the first resistance of newly launched crypto exchange-traded funds.
As of Monday, about $370 billion dollars had disappeared from crypto market value in a 24-hour period, with bitcoin falling below $50,000 and ethereum posting its biggest one-day drop in three years.
Much of the selling was related to the broader market fall, as stocks slumped around the world. What is different for crypto this time compared to the previous sell-off is that more investors are exposed because of the newly launched spot crypto ETF.
Bitcoin ETFs began trading in January, followed by ethereum funds last month. For many investors, this is their first exposure to crypto and the volatility that comes with the package. Net flow data from crypto data firm Coinglass shows that, for the most part, ETF holders are holding out.
Across all spot bitcoin ETFs, there were net outflows of around $168 million. Notably, the popular IBIT fund issued by BlackRock saw no redemptions. Monday's outflows were a fraction of the fund's more than $50 billion in market value. In spot ethereum ETFs, more than $48 million was added across all funds.
Crypto market selloff is first major market test for new spot crypto ETF Starting Wednesday, Morgan Stanley will allow its 15,000 financial advisors to recommend spot bitcoin ETFs issued by BlackRock and Fidelity to clients who meet certain criteria, including having a net worth of more than $1.5 million.
The recent rise in bitcoin prices has directly coincided with the inflow of tens of billions of US dollars into new spot crypto funds. This is a figure that can increase significantly as more financial advisors get involved.
Analysts with Barclays also noted on Monday that trading volume across ETF products is still significantly lower than volume on crypto exchanges.