Spot Bitcoin exchange-traded funds in the United States experienced a shift back to outflows for the first time since President Donald Trump’s inauguration. This change was triggered by the global adoption of the Chinese AI app DeepSeek, causing investors to panic and leading to massive liquidations across the crypto market.
According to data from SoSoValue, the 12 spot Bitcoin ETFs reported $457.48 million in outflows on Jan. 28, ending a seven-day streak of inflows where over $4.2 billion entered the funds. Fidelity’s FBTC saw the highest outflows, losing $268.59 million, followed by Grayscale’s GBTC with $108.47 million in outflows. Bitwise’s BITB and ARK 21Shares’ ARKB also experienced withdrawals of $88.57 million and $50.11 million, respectively. VanEck’s HODL had a modest outflow of $5.68 million, while BlackRock’s IBIT recorded $63.94 million in inflows, bringing its total net inflows to nearly $40 billion since launch. The remaining six BTC ETFs had no flows on the day.
The total trading volume for these investment products reached $4.8 billion on Jan. 27, higher than the $3.65 billion recorded the day before. The significant shift in flows from these BTC ETFs coincided with Bitcoin’s drop from $105,000 to an intraday low of $97,855, alongside almost $1 billion in liquidations across the global crypto market.
The main reason for the market crash seems to be investors adopting a risk-off sentiment due to the success of DeepSeek, a Chinese AI competitor to ChatGPT. Developed at a lower cost compared to U.S.-based projects like OpenAI, DeepSeek has been released as open-source, raising concerns among analysts about its potential threat to U.S. dominance in the AI sector.
As of now, Bitcoin has rebounded and is up 2.6% over the past day, trading at $102,998 per coin. This recovery brings some relief to investors who were shaken by the recent market volatility caused by the adoption of DeepSeek.