Bitcoin ETFs Experience Record Outflows Amid Crypto Market Decline

Bitcoin ETFs have faced significant outflows as the cryptocurrency market continues to plunge after Fed meeting.

Key points:

1. Investors sold $680 million from Bitcoin ETFs on Thursday, as reported by Bloomberg.
2. This represents the largest daily outflow from Bitcoin ETFs to date, indicating strong selling pressure among traders.
3. The sell-off was triggered by the Fed's downgraded outlook for rate cuts next year, unsettling investors.

Crypto investors withdrew a record sum from Bitcoin exchange-traded funds on Thursday, driven by increased selling pressure as markets adjusted expectations for rate cuts in 2025.

Outflows Amid Broader Sell-Off in Risk Assets

The outflows coincide with a wider sell-off in risk assets, as traders reacted to the Fed's updated interest rate outlook for 2025. The Fed's Summary of Economic Projections revealed that officials now anticipate only two quarter-point cuts in the coming year, a reduction from the four rate cuts previously projected in September.

Notable spot Bitcoin ETFs, such as Grayscale's Bitcoin Trust ETF and Bitwise's Bitcoin ETF, have seen approximately an 8% decline since the market opened on Wednesday, the day the Fed announced its new rates guidance.

Spot Bitcoin ETFs recorded $680 million in outflows on Thursday, marking the highest daily volume ever, according to Bloomberg data. Meanwhile, Bitcoin's decline deepened, dropping another 5% to around $96,000 by Friday morning.

Bitcoin Sees 9% Decline, Falling Below $100,000

Bitcoin has lost approximately 9% over the past week, dropping below $100,000 on Thursday after reaching a record high of over $108,000 earlier this week.

While the broader market sentiment is bearish following the Fed meeting, the crypto downturn may also be influenced by seasonal profit-taking, with institutional investors likely cashing in on the substantial gains Bitcoin has achieved this year. Despite this week's significant decline, the leading cryptocurrency is still up more than 125% year-to-date.
However, this selling pressure could exacerbate market volatility. Joseph Dahrieh, managing principal at Tickmill, noted that the decline could heavily impact both cryptocurrency and broader market sentiment, especially as Bitcoin fell below the $100,000 mark, indicating potential short-term volatility and downside risks.

Antonio Di Giacomo, a senior market analyst at XS.com, pointed out that this bearish movement was driven by massive liquidations exceeding $240 million in both long and short positions within 24 hours. He attributed the atmosphere of doubt and speculation to the Federal Reserve's cautious stance, indicating fewer rate cuts for 2025.

Looking ahead, Alex Kuptsikevich, chief market analyst at FxPro, suggested that the sell-off in crypto may persist in the near term, predicting that the total market cap could fall below $3 trillion, down from a peak of $3.7 trillion earlier this month, according to CoinMarketCap data.

He cautioned that a failure to hold above $94.5K would signal a break in the uptrend of the last six weeks, and if Bitcoin falls below $92K on Friday or below $93K by the week's end, it could drop under the 50-day moving average, giving an advantage to bearish sentiment.

Record Outflows from Bitcoin ETFs Reflect Growing Uncertainty

The recent trend of record outflows from Bitcoin ETFs underscores the increasing uncertainty within the cryptocurrency market. As investors grapple with declining prices and shifting sentiment, ETFs, often seen as a gateway for mainstream adoption, are now witnessing significant withdrawals.

This pattern highlights how broader market volatility and regulatory ambiguity can shake even the most structured investment vehicles. While Bitcoin remains a pioneering asset in the digital economy, its future performance will hinge on the resolution of these critical challenges. For now, caution and adaptability remain paramount as the crypto market navigates these turbulent times.

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