Bitcoin ETFs See Record $680 Million Outflow Amid Market Turmoil
Investors withdrew a record $680 million from Bitcoin ETFs on Thursday, marking the highest daily outflow since January's approval of these investment funds. This withdrawal coincides with shifts in market expectations for interest rate cuts by the Federal Reserve (Fed) in 2025.
Grayscale And Bitwise Bitcoin ETFs Experience 8% Decline
The price of Bitcoin dropped approximately 5%, trading around $97,400 at the week's close. This decline aligns with a broader downturn in risk assets, influenced by the Fed's updated economic projections, which now indicate only two quarter-point rate cuts in the upcoming year, down from four previously expected.
Notable Bitcoin ETFs, including Grayscale's Bitcoin Trust and Bitwise's Bitcoin ETF, have seen declines of about 8% since the Fed's announcement, while Bitcoin itself has decreased nearly 9%. Thursday's outflows ended a streak of 15 consecutive days of inflows for US Bitcoin ETFs, amounting to a net inflow of approximately $5.3 billion during that period.
After reaching a record high of over $108,000 earlier in the week, Bitcoin fell below $100,000 on Thursday, dropping to a low of $92,000 before stabilizing around $97,400 despite a 4% loss over the previous 24 hours. Seasonal profit-taking among institutional investors may also be contributing to the bearish sentiment, alongside the Fed's cautious stance.
Analysts Warn Of Continued Crypto Sell-Off
The recent selling pressure could negatively impact market sentiment. Joseph Dahrieh, managing principal at Tickmill, noted that Bitcoin's drop below $100,000 indicates potential short-term volatility and downside risks. Volatility has been further intensified by substantial 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, mentioned that the Fed's indications of fewer cuts for 2025 foster doubt and speculation.
Looking forward, there is speculation that the cryptocurrency market sell-off may continue. Alex Kuptsikevich, chief market analyst at FxPro, suggested that total cryptocurrency market capitalization could fall below $3 trillion from a peak of $3.7 trillion earlier this month. He warned that a failure to maintain above $94,500 would break the uptrend established over the last six weeks, while a drop below $92,000 would place prices under the 50-day moving average, favoring bearish trends.
As of this writing, Bitcoin remains stable above $97,400 as the week concludes, despite the recent losses.
Featured image from DALL-E, chart from TradingView.com