BlackRock Bitcoin ETF Records Record Outflow as Institutional Interest Grows

Largest Monthly Withdrawal Since ETF Launch

BlackRock's iShares Bitcoin Trust (IBIT) recorded its largest monthly capital outflow since its launch in early 2024 during November. According to updated ETF flow data from Farside Investors, approximately $2.2 billion left the fund over the course of the month ^[1]. The sharp outflow coincides with a period of heightened volatility in the Bitcoin market and declining trading volumes in institutional products ^[1].

Structural issues with the fund cannot be inferred from official holdings. Rather, November appears to indicate a significant wave of redemptions from larger investors who are realizing gains or reducing risk following strong performance throughout the year ^[1]. Looking ahead to December, it remains unclear whether November was an exception or marks the beginning of a broader cooling trend ^[1].

JPMorgan Develops Structured Bitcoin Products

Despite outflows from BlackRock, institutional interest in Bitcoin products remains robust. JPMorgan Chase is preparing a structured note linked to the BlackRock iShares Bitcoin Trust ^[2]. The product aims to provide institutional investors with access to the ETF through predefined return targets and protective features.

Bloomberg analyst Eric Balchunas explained that this is a Bitcoin-linked structured note that could offer significant upside potential through 2028 while including hedging parameters ^[2]. According to filing terms, JPMorgan will set an initial target price for IBIT in the coming month. If the ETF trades at or above this level approximately one year later, investors receive a minimum return of 16 percent ^[2].

If the ETF falls below this threshold, the notes extend through 2028. Should IBIT exceed JPMorgan's second benchmark by year-end, investors would receive 1.5 times the ETF gains with no set cap ^[2]. The notes also include conditional capital protection: in the event of a decline of up to 30 percent, investors receive full capital back; losses beyond that correspond to the ETF decline ^[2].

Texas Invests Ten Million Dollars in Bitcoin

At the state level, Texas has taken a significant step by investing five million dollars in BlackRock's iShares Bitcoin Trust at an average Bitcoin price of approximately $87,000 ^[4]. Lee Bratcher, president of the Texas Blockchain Council, highlighted the purchase in a post on X, identifying Texas as the first U.S. state to purchase Bitcoin ^[4].

An additional five million dollars has been allocated for direct Bitcoin purchases ^[4]. The Bitcoin price was trading at $87,769 at the time of reporting, following an all-time high of over $126,000 in October ^[4].

Crypto-Friendly Fed Candidate Under Consideration

In another development, Bloomberg reported that crypto-friendly Kevin Hassett is the preferred choice of U.S. President Donald Trump to succeed Jerome Powell as head of the Federal Reserve ^[4]. Hassett, former chairman of the Council of Economic Advisers, is known for advocating rate cuts and maintaining direct ties to the crypto industry ^[4].

Hassett holds approximately one million dollars in Coinbase stock and received $50,001 annually for his work on Coinbase's Academic and Regulatory Advisory Council ^[3]. He also served on the advisory board of crypto fund manager One River Digital Asset Management ^[3]. The probability of Hassett succeeding Powell has risen to 58 percent according to prediction market Kalshi ^[4].

Meanwhile, the CME Group's FedWatch Tool shows an increasing probability of 84.9 percent for another rate cut at the Fed meeting on December 10 ^[3].