Bitcoin ETFs lose $326M amid ‘evolving’ dynamic with TradFi markets
The evolving relationship between Bitcoin and traditional financial markets is under renewed pressure as global investors flee risk assets amid intensifying US trade tensions.
US-listed spot Bitcoin (BTC) exchange-traded funds (ETFs) recorded their fourth consecutive day of outflows on April 8, with more than $326 million in net redemptions across products, according to data from Farside Investors.
BlackRock’s iShares Bitcoin Trust ETF (IBIT) saw the largest sell-off of over $252 million, its biggest daily outflow since Feb. 26.
Bitcoin ETF flows, US dollars, millions. Source: Farside Investors
The selling pressure follows US President Donald Trump’s April 2 announcement of sweeping reciprocal import tariffs, which triggered a historic $5 trillion wipeout in the S&P 500 over two days.
Related: Bitcoin may rival gold as inflation hedge over next decade — Adam Back
The delayed crypto market turbulence after the tariff-related sell-off in traditional markets highlights Bitcoin’s “evolving relationship with traditional markets,” according to Lennix Lai, global chief commercial officer at OKX exchange.
Lai told Cointelegraph:
“While falling 26% since January’s inauguration, Bitcoin’s relative resilience in the first two days following the tariff announcement — dropping 6% compared to Nasdaq’s 11% decline — suggests a nuanced dynamic emerging between crypto and conventional assets.”
Bitcoin initially remained firmly above the $82,000 support level but plummeted below $75,000 on Sunday, April 6.
BTC/USD, 1-year chart. Source: Cointelegraph Markets Pro
Some industry leaders attributed Sunday’s sell-off to Bitcoin’s 24/7 liquidity mechanics, which made BTC the only large liquid asset available for de-risking over the weekend.
Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes
Bitcoin remains tied to global liquidity conditions
While there is an “encouraging sign” of a weakening correlation between Bitcoin and equities, Bitcoin’s price trajectory remains tied to global liquidity conditions, Lai said, adding:
“Though I see early signs of divergence, I believe Bitcoin remains fundamentally tied to global liquidity conditions, warranting caution amid potential market stresses — whilst gold remains as a hedge against geopolitical instability.”
“What’s most significant here isn’t just price action but Bitcoin’s growing conceptual influence — people increasingly view it as a valid strategic reserve asset for diversification in chaotic traditional markets,” Lai added.
Other analysts also see the growing money supply as Bitcoin’s main catalyst.
“Bitcoin trades solely based on the market expectation for the future supply of fiat,” according to Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom.
Magazine: Bitcoin ATH sooner than expected? XRP may drop 40%, and more: Hodler’s Digest, March 23 – 29
Ethereum’s 10th anniversary celebration was marked by an uptick in institutional demand for Ether as an alternative treasury reserve asset, prompting Wall Street to look past Bitcoin.
Stablecoin-linked stocks in Hong Kong plunged by double digits amid the city’s new regulatory transition, but experts say it’s a healthy correction.
Chancellor Rachel Reeves has dodged calls from her predecessor Anneliese Dodds for a wealth tax to be considered ahead of this autumn’s budget.
When Sir Keir Starmer became Labour leader in 2020, Ms Dodds was his first pick for shadow chancellor. However, she did not last long and was replaced by Ms Reeves, who then got the government job after last year’s election win.
Speaking to the Sky News political editor Beth Rigby on the Electoral Dysfunction podcast, Ms Dodds said she had examined wealth taxes when she was briefly in the shadow chancellor job and how one could be implemented.
She said: “I would hope the Treasury is considering that kind of evidence, as well as other changes that have been put forward.”
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‘Rachel Reeves would hate what you just said’
Asked today if about Ms Dodds’ intervention, Ms Reeves said: “Decisions around tax are decisions that are made at a budget and we’ll make those decisions in the appropriate way, but the number-one priority of this government is to grow the economy.
“And that means bringing more investment into Britain, creating more good jobs paying decent wages here in Britain.
Listen here to hear Ms Dodds’ full comments:
👉 Click here to listen to Electoral Dysfunction on your podcast app 👈
“We’ve got to get the balance right on taxation because we want that investment, we want those jobs to come here.
“That’s why we’re reforming the planning system, secured three trade deals in the first year of this Labour government, cutting back on unnecessary regulation, and reforming our pension system to unlock money for businesses to be able to invest here in the UK.”
Read more:
2021: Dodds demoted, Reeves promoted
Dodds resigns from govt over aid cut
What is a wealth tax?
The government’s financial position is stretched ahead of the next budget, due at the end of autumn.
Ms Reeves has committed herself to not changing her fiscal rules, leaving little wiggle room to avoid tax rises or spending cuts.
This is due to the government’s inability to save money through policies like welfare reform, which were gutted due to a rebellion of backbench Labour MPs.
Last week, Business Secretary Jonathan Reynolds branded the suggestion of a wealth tax “daft” – but he has less influence over the writing of the budget than the chancellor.
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Meanwhile, reports from the Daily Telegraph suggested that Deputy Prime Minister Angela Rayner backed increasing taxes, including reinstating the pensions lifetime allowance and a higher corporation tax level for banks.
Ms Dodds also wants to see those considered.
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