Bitcoin ETFs see $171M outflow as Iran war fears grow

• $171 million was withdrawn from US spot Bitcoin ETFs on Thursday, marking the largest single-day outflow since March 3.
• Geopolitical instability, specifically fears of an escalation in the US-Israel-Iran conflict, is cited as the primary driver of the sell-off.
• Despite recent outflows, Bitcoin ETFs have seen $1.36 billion in net monthly inflows during March, maintaining a strong accumulation trend.

Institutional Capital Retreats Amid Geopolitical Risk

On Thursday, investors pulled $171 million from US-listed spot Bitcoin ETFs, representing the most significant period of redemptions since early March, when outflows reached $348 million. This shift in sentiment follows reports that the US Department of War is deploying thousands of additional troops to the Middle East. Although President Donald Trump announced a 10-day extension to a ceasefire regarding Iranian energy infrastructure—pushing the deadline to April 6—market participants remain cautious about potential weekend escalations.

Data from Farside Investors highlights the specific impact across major funds:

• BlackRock’s iShares Bitcoin Trust (IBIT): $41 million in outflows.
• Fidelity’s Wise Origin Bitcoin Fund (FBTC): $32 million in outflows.
• ARK 21Shares Bitcoin ETF (ARKB): $30.5 million in outflows.
• Grayscale’s Bitcoin Trust (GBTC): $24 million in outflows.

Market Resilience and Historical Context

Despite the recent dip, the broader trend for Bitcoin ETFs remains positive for the month. March has seen a total of $1.36 billion in net inflows, positioning it to be the first month of significant net accumulation since October 2025, when inflows peaked at $3.42 billion. Bloomberg ETF analyst Eric Balchunas noted that the ETFs are showing "incredible fortitude," especially considering Bitcoin's 46% correction from its all-time high of $126,198 recorded in October 2025.

Balchunas compared the current market behavior to gold's historical performance, pointing out that when gold dropped 40% a decade ago, roughly a third of its investors exited their positions. In contrast, Bitcoin ETF investors appear more committed despite the underlying asset's price falling below the $70,000 threshold this week.

Impact on Bitcoin Price Action

Bitcoin (BTC) felt the weight of the institutional sell-off, dropping 4.7% over the past seven days to trade at approximately $67,780. Analysts suggest that the market is particularly sensitive to military developments. Kyle Rodda, a senior analyst at Capital.com, explained that investors are wary of being caught off guard, recalling the surprise military strikes on February 28 that occurred despite ongoing negotiations. This "jittery" sentiment is expected to persist as long as the threat of a wider conflict in the Middle East looms over global financial markets.