World’s largest spot Bitcoin ETF lost half of its assets in one day

The Purpose Bitcoin ETF experienced outflows of 24,510 BTC on Friday

Bitcoins on a dark background                                 
The Canadian-listed Purpose Bitcoin ETF has lost its crown as the world’s largest – Photo: Shutterstock
                                

The world’s largest Bitcoin spot exchange-traded fund (ETF) lost half of its assets in one day last week, potentially exacerbating the weekend’s sell-off.

The Purpose BTC ETF

According to the Norway-based research firm Arcane Research, the Purpose Bitcoin ETF experienced the largest single-day redemption in its 14-month history on Friday. 

Outflows for the fund listed on the Canadian Stock Exchange totalled 24,510 Bitcoins, meaning that it had to sell around $500m (£406m). As a result of the sell-off, Purpose is no longer the largest Bitcoin exchange-traded product (ETP) provider in the world. 

The significant and sudden outflow was likely caused by a forced seller in a substantial liquidation. 

The cryptocurrency market has been rocked by a slew of uncertainty surrounding prominent cryptocurrency lenders such as BlockFi and Celsius, with the former seeking additional financing to stay afloat and the latter halting client withdrawals to prevent a bank run. 

Prominent cryptocurrency hedge funds have also suffered. Most notably, Three Arrows Capital – which had over $3bn worth of cryptocurrencies under management in April – has called in lawyers and advisers to help it repay creditors and investors. 

With large amounts of Bitcoin being forced back onto the public market, the cryptocurrency fell from around $22,500 on Friday to $17,601 on Saturday, a 20% decline. 

ProShares takes the top spot

Arcane Research’s Vetle Lunde said: “As of now, June 2022 has been the worst month in BTC ETPs’ history related to outflows, outpacing the outflows experienced in April.”

Following Purpose’s sell-off, ProShares is now the largest ETP provider in the world with its ProShares Bitcoin Strategy ETF (BITO).

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