Bitcoin ETFs See Record $671.9M Outflows in a Single Day
Bitcoin exchange-traded funds (ETFs) experienced a substantial sell-off on December 19, with net outflows reaching an unprecedented $671.9 million in just one day. This marked the largest single-day outflow event of the year, underscoring a turbulent period for the cryptocurrency market.
Data from Farside Investors revealed that the most significant outflows were recorded by Grayscale’s GBTC, which shed $208.6 million. ARK Invest’s ARKB followed, reporting a loss of $108.4 million. These withdrawals coincided with Bitcoin’s price decline, as it hovered around $96,409, further intensifying market pressure.
Adding to the volatility, over $1 billion was liquidated from the broader cryptocurrency market within 24 hours, highlighting the far-reaching impact of the ETF sell-off.
According to Sosovalue data, the total net assets of Bitcoin ETFs dropped to $109.7 billion on December 19, erasing much of the gains made earlier in the month. Just two days prior, on December 17, total assets had reached $121.7 billion, emphasizing the severity of the recent outflows.
Market Impact of Bitcoin ETF Outflows
The record Bitcoin ETF outflows paralleled a broader decline in Bitcoin’s price, leading to a cumulative crypto ETF net outflow of $732.4 million, according to CoinMarketCap data.
Despite the sharp outflows, Bitcoin dominance in the cryptocurrency market remained strong at 57.4%, reaffirming its position as the leading digital asset. Analysts suggest that the market’s unpreparedness for adverse news contributed to the downturn. One expert remarked that the current decline might be temporary, driven by an overreaction to unexpected developments.
The Intersection of U.S. Politics and Economic Policy
The upcoming administration of President-elect Donald Trump is anticipated to be pro-crypto, potentially fostering innovation and growth in the industry. This optimism has already fueled a resurgence in the crypto market, with Bitcoin breaking the $107,000 threshold as investors’ confidence returned.
However, the U.S. Federal Reserve’s monetary policy remains a critical factor. While investors expected a 0.25% rate cut, Federal Reserve Chair Jerome Powell struck a hawkish tone, indicating only two more rate cuts by 2025. This announcement sent ripples across financial markets, with the S&P 500 experiencing a decline that may have contributed to the recent crypto market downturn.
Surge in ‘Buy the Dip’ Sentiment
Despite the market’s bearish trends, the “buy the dip” mentality has gained significant traction among crypto enthusiasts. According to a December 19 post by analytics firm Santiment, the ratio of social media discussions about buying the dip reached its highest level in over eight months.
This surge in sentiment is reminiscent of earlier market movements. For instance, on April 12, as Bitcoin’s price dropped below $70,000 to $67,000, similar chatter was observed before the cryptocurrency continued its descent to $63,000 on April 13.
