Bitcoin exchange-traded funds (ETFs) faced a significant sell-off on Dec. 19, reaching net outflows of a record $671.9 million, marking the largest single-day outflow event of the year.
According to Farside Investors data, the largest outflows came from Grayscale’s GBTC, shedding $208.55 million, followed shortly by ARK Invest’s ARKB, which fell $108.4 million.
The fallout of these outflows aligns with a fall in Bitcoin’s (BTC) price as it hovers around $96,409 and coincides with more than $1 billion being liquidated from the market in 24 hours.
Sosovalue data shows that the total net assets of Bitcoin ETFs were $109.66 billion as of Dec. 19, erasing most of the gains seen in December, which reached $121.68 billion on Dec. 17.
Market impact of Bitcoin ETF investment outflows
The Bitcoin ETF outflows coincided with the drop in BTC price and resulted in a cumulative crypto ETF net outflow of $732.4 million, according to CoinMarketCap data.
Bitcoin dominance stands at 57.4%, continuing to hold the majority of the crypto market share despite the significant outflows of Dec. 19.
One analyst suggested that the ongoing market decline could be short-lived, suggesting the market was “completely unprepared for bad news,” leading to the sharp downturn.
At the crossroads of US politics and economic factors
The upcoming United States Donald Trump administration is expected to be pro-crypto if the President-elect follows through on his promises and helps support innovation in the industry.
This expectation has seen the BTC price break the $107,000 milestone, and the crypto market has been reinvigorated as optimism and greed return to space.
However, although US investors anticipated a 0.25% rate cut by the US Fed, Chair Jerome Powell spurred a hawkish outlook when he indicated that only two more rate cuts would be set for 2025.
The announcement saw the S&P 500 sharply fall, potentially resulting in the knock-on effect currently seen in crypto as uncertainty replaces market greed.
Buy the dip mentality peaks
Crypto analysis firm Santiment said in a Dec. 19 X post that the ratio of crypto discussions surrounding buying the dip in the market had hit its highest level in over eight months.
Despite the market turning red as Rudolph’s nose, the social dominance score, which mentions “buying the dip” across social media platforms, has hit 0.061.
This score was beaten on April 12, when BTC’s price dropped below $70,000 to around the $67,000 mark, before continuing its decline to around $63,000 on April 13.
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