TL;DR
Bitcoin ETFs experienced their largest single-day outflows of the year, with investors withdrawing $671.9 million, coinciding with Bitcoin’s price falling below $100,000.
Over $1 billion in liquidations occurred within 24 hours, with the bulk from long positions, as Bitcoin’s price dropped to $94,073, reflecting an 8.43% decline.
The market turmoil was exacerbated by the U.S. Federal Reserve’s hawkish stance on monetary policy for 2025, leading to increased volatility and a reassessment of market expectations.
Bitcoin ETFs experienced their largest single-day outflows of the year, with investors withdrawing a staggering $671.9 million. This significant sell-off coincided with a sharp decline in Bitcoin’s price, which fell below the critical $100,000 mark, triggering widespread market liquidations.
According to data from Farside Investors, the biggest outflows came from Grayscale’s GBTC, which shed $208.6 million, followed by ARK Invest’s ARKB, which saw $108.4 million in outflows.
Market Liquidations Exceed $1 Billion
The massive outflows from Bitcoin ETFs were part of a broader market downturn that saw over $1 billion in liquidations within 24 hours. Data from CoinGlass revealed that the bulk of these liquidations, approximately $856.66 million, were from long positions, indicating that bullish traders were caught off guard by the sudden price dip.
Bitcoin’s price dropped to a low of $94,073, reflecting an 8.43% decline, while other major cryptocurrencies like Ethereum (ETH) and Solana (SOL) also suffered significant losses.
Impact of Federal Reserve’s Hawkish Stance
The market turmoil was exacerbated by the U.S. Federal Reserve’s hard posture on monetary policy for 2025. The Fed’s announcement of only two rate cuts in 2025, down from the anticipated four, led to increased market volatility and a reassessment of market expectations.
This shift in sentiment contributed to the sell-off in both the stock and crypto markets, as investors sought to reduce their exposure to risk assets.
Future Outlook
Despite the recent downturn, some analysts remain optimistic about the long-term prospects of Bitcoin and other cryptocurrencies. Alex Kruger, a popular economist, suggested that the recent correction might be an overreaction and that Bitcoin could recover post-Christmas.
He highlighted that euphoria and leverage have been largely flushed out from the crypto market, which should minimize the downside risks.
The record outflows from Bitcoin ETFs and the subsequent market liquidations underscore the volatility and unpredictability of the cryptocurrency market. As Bitcoin’s price fell below $100,000 and major altcoins suffered significant losses, the market is in a state of flux.
