April Sees $800M Withdrawal from Bitcoin ETFs as Institutions Turn to Bonds Amid Tariff Fluctuations

Bitcoin ETFs listed in the U.S. are on track to experience the second-largest monthly outflow in their history, with over $800 million expected to leave the funds by the end of April. This follows a tough couple of months, with the funds seeing a record $3.56 billion in outflows in February, followed by $767 million in March.

While cryptocurrency advocates have been vocal about the potential for Bitcoin to serve as a hedge against volatility—especially in the context of tariff-induced disruptions in the U.S. Treasury market—institutions are sticking to bonds. The popular social media sentiment of “sell bonds, buy Bitcoin” has not gained traction among large-scale investors, who continue to favor safer, more traditional assets.

The demand for U.S. Treasury bills has remained strong, despite the turbulence in the broader financial markets. On Monday, the U.S. Treasury successfully auctioned $80 billion in three-month bills at an interest rate of 4.225%, slightly higher than the previous auction rate of 4.175%. Similarly, $68 billion in six-month bills were sold at an interest rate of 4.06%, marginally up from 4.00%.

The bid-to-cover ratios for both short-term bills were notably high. For the three-month bills, the ratio rose to 2.96, indicating nearly three bids for every bill issued. The ratio for the six-month bills also increased, climbing to 2.90 from 2.79, highlighting the ongoing demand for U.S. debt.

This strong interest suggests that institutions still view U.S. Treasury debt as a safe haven, especially given its liquidity and low-risk profile. Treasury bills are also widely used in repo transactions, where institutions use short-term government securities to secure financing.

The preference for bonds over Bitcoin comes amid growing economic uncertainty. President Trump’s trade war with China has injected further volatility into the market, contributing to the weakening of corporate earnings guidance. According to Bank of America, its 3-month guidance ratio, which tracks the reliability of corporate outlooks, has fallen to a low of 0.4x—its weakest reading since April 2020.

Additionally, recession fears have escalated, with betting markets now assigning a greater than 50% probability to a U.S. recession. This climate of uncertainty, coupled with rising yields on Japanese bonds, has further reduced appetite for riskier assets like Bitcoin.