Yesterday, Bitcoin exchange-traded funds (ETFs) witnessed a record capital outflow of up to $672 million, marking the largest drop since these funds launched in January this year.

Details of ETF Capital Flow Developments

  • Largest loss:

    • Grayscale Bitcoin Trust lost $208.6 million.

    • ARK 21Shares Bitcoin recorded a capital outflow of $108.4 million.

  • Correlation with Bitcoin price:

    • The Bitcoin price has dropped 9.2% in the past 24 hours, currently trading below $93,000, according to data from CoinMarketCap.

Reasons for Selling Pressure

  1. U.S. Federal Reserve policy:

    • At the meeting on Wednesday, the Fed is expected to cut rates by another 25 basis points, bringing the rates down to 4.25% - 4.50%.

    • Fed Chairman Jerome Powell signaled a slowdown in rate cuts, causing unease in the market.

    • The market expects four rate cuts in 2025, but only forecasts two, making investors more cautious.

  2. Low liquidity at the end of the year:

    • According to Wintermute, traders have reduced risk ahead of the holiday season, which typically has low liquidity.

  3. High management fees of GBTC:

    • GBTC charges a management fee of 1.5% per year, significantly higher than other ETF funds, which typically charge only 0.2-0.3%.

Future Forecast

  • Expectations for a new price increase:

    • Ajay Dhingra from Unizen believes that SEC Chairman Gary Gensler's departure on January 20 could act as a catalyst for a Bitcoin price increase.

    • However, Dhingra also warns that regulatory tightening moves before Gensler's term ends could trigger a major sell-off.

Conclusion

Selling pressure from Fed policy factors, low liquidity at the end of the year, and high costs of some ETF funds have led to record capital outflows from Bitcoin ETFs. However, experts still hope that upcoming events may open a new price increase cycle for Bitcoin.