US Bitcoin ETFs See $1.2B Outflow as London Launches Crypto ETNs

The $1.2 billion net outflow from US Bitcoin ETFs represented a significant shift in institutional sentiment, with nearly every major issuer experiencing substantial withdrawals. BlackRock’s IBIT, one of the market leaders, recorded $276 million in outflows, while Fidelity’s FBTC saw $169 million exit. Other prominent funds faced even steeper declines, with ARK Invest’s ARKB losing $290 million and Bitwise’s BITB shedding $128 million. Grayscale’s two funds collectively experienced $321 million in outflows, contributing to the overall market retreat.

This reversal occurred during a volatile period for Bitcoin, which briefly fell below $104,000—its lowest price level since June. Industry analysts attributed the market weakness to macroeconomic concerns, particularly the uncertainty surrounding US-China tariff wars that shook confidence in risk assets like Bitcoin. The timing was notable given that the previous two weeks had seen over $5 billion flow into these same products, a period many interpreted as evidence of growing institutional conviction in digital assets.

While US flows turned defensive, a contrasting development was unfolding in the United Kingdom. On October 20, Bitcoin exchange-traded notes officially began trading on the London Stock Exchange, marking the end of the UK’s three-year retail ban on crypto investment products. BlackRock led the debut with its iShares Bitcoin ETP, joined by other leading issuers including Bitwise, signaling major financial institutions’ commitment to expanding crypto access in European markets.

Early feedback from the London launch showed promising signs despite mixed broker support. ByteTree founder Charlie Morris noted successful initial trading activity through platforms such as Interactive Investor, Swissquote, and Trading 212, though some brokers like AJ Bell were slower to enable access. Bradley Duke, Bitwise’s head of Europe, characterized the launch as a “big week” for retail investors, emphasizing that the “direction of travel is clear for crypto” despite the current challenges in US markets.

Against this backdrop of shifting global flows, Galaxy Research has projected that crypto investment products could attract up to $600 billion in new inflows as traditional financial institutions broaden distribution. The firm’s analysis highlights the US advisory market as a vast, largely untapped opportunity, noting that approximately 300,000 financial advisors manage about $30 trillion in client assets. According to Galaxy Research, “If even a modest 2% allocation to bitcoin ETFs emerged across this channel, that would translate to roughly $600 billion in potential inflows.”

Such inflows would represent a seismic shift for the digital asset market, rivaling the entire global gold ETF market—currently valued at approximately $472 billion—and quadrupling the combined $146 billion in assets under management across US spot Bitcoin funds. Recent policy moves by leading traditional financial institutions support this optimistic outlook. Morgan Stanley recently recommended up to a 4% allocation to digital assets, while Vanguard is reportedly exploring offering select third-party crypto ETFs to its brokerage clients.

Galaxy Research argues that the full opening of large advisory platforms could mark a structural shift in how digital assets integrate into mainstream finance. The firm notes that once access is fully enabled, financial advisors will be able to include crypto directly within traditional balanced portfolios, moving the asset class from retail-driven speculation toward advisor-led portfolio construction. This transition could bring more mature liquidity, as advisory-driven allocations typically follow longer holding periods and stricter compliance frameworks, potentially enhancing price stability and aligning Bitcoin more closely with traditional asset classes like equities, bonds, and gold.