Spot Bitcoin ETFs Bleed: 6,700 BTC Exit Amidst Largest Outflow In Months

Amid a wider readjusting of market expectations for interest rate cuts by the Federal Reserve (Fed) for 2025, investors withdrew a record $680 million from Bitcoin ETFs on Thursday, the highest outflow in a single day since January’s approval of these investment funds.

As Bitcoin ETFs faced this outflow, the price declined, dropping another 5% to trade around $97,400 to close the week. The sell-off aligns with a general downturn in risk assets, triggered by the Fed’s updated economic projections released earlier this week. 

The US central bank now anticipates only two quarter-point rate cuts in the coming year, a significant reduction from the four cuts previously expected at its September meeting.

Notable Bitcoin ETFs, including Grayscale’s Bitcoin Trust and Bitwise’s Bitcoin ETF, have experienced declines of approximately 8% since the Fed’s new guidance, while Bitcoin itself has lost about 9% in the same timeframe. 

Notably, Thursday’s outflows broke a streak of 15 consecutive days of inflows for the twelve US Bitcoin ETFs, for a net inflow of approximately $5.3 billion during this period.

After hitting a record high of just over $108,000 earlier in this week, the market’s top cryptocurrency dropped below the $100,000 level on Thursday. Prior to the recent recovery, which is just around $100,000, it fell all the way to $92,000. 

While the bearish sentiment in the markets can be attributed to the Fed’s cautious stance, it is also likely influenced by seasonal profit-taking among institutional investors of the Bitcoin ETFs. 

The recent selling pressure could further strain market sentiment, as noted by Joseph Dahrieh, managing principal at Tickmill.

“This decline could weigh strongly on the cryptocurrency and broader market sentiment, particularly as Bitcoin fell below the USD 100,000 mark, indicating potential short-term volatility and downside risks,” he remarked.

The volatility has been exacerbated by massive liquidations in both long and short positions, totaling over $240 million within a 24-hour period. Antonio Di Giacomo, a senior market analyst at XS.com, commented, “The Federal Reserve’s cautious stance in signaling fewer cuts for 2025 created an atmosphere of doubt and speculation.”

Looking ahead, the sell-off in the cryptocurrency market may persist in the near term. Alex Kuptsikevich, chief market analyst at FxPro, speculated that the total market capitalization of cryptocurrencies could drop below $3 trillion, down from a peak of $3.7 trillion earlier this month. 

He cautioned that “a failure below $94,500 would signal a break of the uptrend of the last six weeks, while a fall below $92,000 would bring the price under the 50-day moving average. In this case, time is playing on the side of the bears.”

As of this writing, Bitcoin has managed to stabilize above $97,400 as the week draws to a close, despite registering 4% losses over the previous 24 hours.

Featured image from DALL-E, chart from TradingView.com