Bitcoin Bear Market Deepens as ETF Investors Pull Out $870 Million

Bitcoin Bear Market Deepens as ETF Investors Pull $870 Million Amid Renewed Risk Aversion

The Bitcoin bear market deepened sharply on Friday as the world’s largest cryptocurrency extended its decline below the $100,000 mark, rattled by a fresh wave of risk aversion and one of the steepest exchange-traded fund (ETF) outflows since spot Bitcoin ETFs made their debut. Investors withdrew nearly $870 million from Bitcoin-focused ETFs, signaling a decisive shift toward caution across digital-asset markets.

Bitcoin fell as much as 2.8 percent, sliding below $96,000 before trimming some losses. With this latest drop, the token now sits more than 20 percent below its all-time high, touched in early October, reinforcing the ongoing downward momentum across the crypto landscape.

Crypto Market Under Strain After Massive Liquidations and Trillion-Dollar Value Wipeout

The latest decline comes on the heels of severe turmoil that gripped the crypto market in early October. According to CoinGecko, more than $19 billion in leveraged positions were liquidated on October 10, triggering a market-wide collapse that erased over $1 trillion from the total valuation of all cryptocurrencies.

The pressure has not eased. In the past 24 hours alone, more than $1 billion of leveraged crypto bets have been wiped out, CoinGlass data shows. As Bitcoin continues to fall, risk sentiment across digital assets remains fragile, with traders opting to unwind positions rather than accumulate during dips.

The persistent unwinding of leveraged trades appears to be fueling this extended Bitcoin bear market, making prices increasingly vulnerable to sudden downward swings.

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ETF Investors Exit Bitcoin Positions as Outflows Intensify

One of the most telling indicators of weakening sentiment has been the sharp increase in Bitcoin ETF outflows. On Thursday, funds investing in Bitcoin saw net withdrawals worth $870 million, marking the second-largest daily outflow since ETFs were launched.

ETF flows often serve as a barometer of institutional interest. The latest selloff points toward institutional players reducing their exposure amid growing macroeconomic uncertainty. Analysts say the outflows signal a broader pullback rather than short-lived profit-taking.

The reversal also underscores weakening confidence after Bitcoin’s inability to sustain levels above $100,000 despite earlier bullish catalysts such as rising institutional adoption and macro hedging narratives.

Macro Headwinds Add Pressure as Traders Reassess Federal Reserve Outlook

The persistent weakness in Bitcoin coincides with a broader risk-off environment. A brief rebound in U.S. equities earlier this week faded quickly as concerns resurfaced regarding inflation and delayed economic data following the end of the government shutdown.

Traders remain uncertain about whether the Federal Reserve can justify near-term interest rate cuts, especially with inflation indicators yet to be updated. The reassessment has placed pressure on riskier assets, from equities to crypto, amplifying volatility in the most speculative corners of the market.

Max Gokhman, Deputy CIO at Franklin Templeton Investment Solutions, said the current correlation between crypto and traditional risk assets remains high.
“The current selloff is fully correlated with other risk assets, but the magnitude in crypto is larger given its higher volatility. Crypto’s beta to macro risks will stay high until deeper institutional participation broadens beyond Bitcoin and Ether,” he noted.

Liquidity Thins as Market Depth Drops, Increasing Vulnerability to Sharp Swings

Beyond selling pressure, the crypto market is now grappling with a significant drop in liquidity. Market depth — the ability of markets to handle large trades without major slippage — has fallen about 30 percent from its peak earlier this year, according to analytics firm Kaiko.

Thinner liquidity often results in steeper price reactions to relatively smaller trade volumes. As a result, Bitcoin faces fewer technical support levels, increasing the likelihood of deeper corrections in the near term.

Augustine Fan, Partner at SignalPlus, highlighted the risk of continued downside.
“With Bitcoin now having turned negative since President Trump’s inauguration, and the overall crypto market cap having round-tripped year-to-date, there is not much technical support from here to the low $90,000,” he said.
Fan added that sentiment may remain depressed until a clearer macroeconomic picture emerges.

Options Market Reflects Rising Demand for Volatility Strategies

Amid the renewed selloff, Bitcoin options traders are bracing for heightened volatility. According to Nick Ruck of LVRG Research, demand has increased for neutral options strategies such as strangles and straddles — indicating that traders expect large price swings but remain uncertain about direction.

These volatility-focused strategies typically gain popularity during periods of macro uncertainty and thin liquidity, when directional bets become harder to justify. Their rising demand signals that market participants anticipate continued turbulence in the Bitcoin bear market.

Outlook: Bitcoin Faces Key Test as Market Searches for Support Near $90,000

With sentiment weakening, liquidity thinning and ETF outflows accelerating, Bitcoin now faces a crucial test of support in the low $90,000 range. Analysts warn that a decisive break below this zone could trigger another wave of liquidations, deepening the bear cycle.

For now, macroeconomic clarity remains the key determinant of recovery. All eyes are on upcoming U.S. economic releases and Federal Reserve communication, which could influence whether risk appetite improves or deteriorates further.

As the Bitcoin bear market extends, traders and institutional investors remain cautious, awaiting a clearer signal before reentering risk-heavy positions.

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