BlackRock’s Bitcoin ETF saw $72.7M outflows, while Fidelity’s ETF recorded $208.5M amid market uncertainty.
Bitcoin dropped to $92,175 before rebounding to $98,431, showing cautious investor sentiment after recent highs.
The US Fed’s hawkish stance increased uncertainty, fueling significant Bitcoin ETF outflows and market hesitation.
The US Spot Bitcoin ETF ended its 16-day inflow streak this week after the crypto market experienced a significant decline. Investor sentiment weakened as Bitcoin’s price dropped sharply. This led to substantial outflows from major ETFs, including BlackRock’s IBIT and Fidelity’s FBTC.
Record Outflows Hit BlackRock and Fidelity ETFs
On December 20, BlackRock’s Bitcoin ETF (IBIT) recorded its largest outflow since launch, totaling $72.7 million. The outflow followed Fidelity’s FBTC losing $208.5 million on December 19. This marked its largest single-day decline since January 2024. US Spot Bitcoin ETFs saw combined outflows of $671.9 million on December 19 and $277 million on December 20. These figures indicate growing caution among institutional investors due to ongoing market volatility.
Despite Bitcoin’s strong performance earlier this year, ETFs faced mounting selling pressure. Analysts suggest that reduced risk appetite among investors contributed to these substantial outflows.
Bitcoin Price Reacts to Market Uncertainty
Bitcoin declined significantly this week to $92,175 before rising slightly to $97,431. Bitcoin hit $108,000 after the Trump election extending its winning streak. Discussions about a US Bitcoin Strategic Reserve had fueled the investor optimism. On the same note, corporate investors, such as MicroStrategy, kept on buying BTC showing long-term bullish sentiment.
Major Bitcoin mining firms, including MARA and Hut 8, also expanded their Bitcoin reserves despite market corrections. However, ETF outflows indicate that institutional investors remain cautious in the short term.
Federal Reserve Policy Adds Pressure
The US Federal Reserve recently announced a 25 basis-point interest rate cut while signaling a cautious outlook for future rate adjustments. This hawkish tone added uncertainty to both traditional and digital asset markets. Market analysts believe the Federal Reserve's stance contributed to risk-off behavior among investors. Consequently, ETF outflows increased, and the broader financial sector felt the impact. Despite these challenges, experts remain optimistic about Bitcoin’s long-term potential and institutional adoption.
Investor Sentiment Remains Cautious
The bitcoin price increased by nearly 5% back from recent lows. However, data obtained from CoinGlass defer since Bitcoin Futures Open Interest remained constant. This means that investors have not fully recovered their confidence to start investing and they are not doing so aggressively.
Some analysts believe that while short-term volatility may be low, the long-term upward trend for new institutional purchases of Bitcoin ETFs will continue to soar. These regulated products like BlackRock’s IBIT and Fidelity’s FBTC have emerged as vital for accessing Bitcoin for institutional investors.
Today investors are now focusing on following the global macroeconomic conditions and Bitcoin price fluctuations. These factors will be particularly influential in shaping ETF and more generally the overall market sentiment in the following weeks.
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