Bitcoin Funds Set for Worst Month as Investors Yank $3.5 Billion

Bitcoin markets are under intense selling pressure this month as investors pull money out of Bitcoin-focused funds at a rapid pace. Bitcoin funds are now set for their worst month since their launch, highlighting growing stress and fading sentiment across the cryptocurrency landscape.

Bitcoin itself has seen sharp volatility. The world’s largest digital asset fell to $80,553 on Friday, before recovering some ground over the weekend. By Monday morning in London, Bitcoin was trading at $86,998, but it remains down 7% year-to-date, reflecting persistent weakness in the crypto market.

Massive $3.5 Billion Outflow from Bitcoin ETFs

The most important development this month is the steep withdrawal of capital from Bitcoin exchange-traded funds (ETFs). According to Bloomberg data, investors have already pulled out $3.5 billion in November, nearly matching the earlier record outflow of $3.6 billion seen in February.

A major portion of this selling pressure is centered on BlackRock’s IBIT Bitcoin ETF, one of the most dominant funds in the category. IBIT holds roughly 60% of all Bitcoin ETF assets but has seen $2.2 billion in outflows this month, placing it on track for its worst-ever monthly performance unless a major reversal comes soon.

Market analysts are treating this as a clear indicator of exhaustion. Nick Ruck, director at LVRG Research, said the data shows “the euphoria from earlier this year has been fully exhausted.”

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Bitcoin Set for Its Worst Month Since 2022 Crypto Crisis

The mass withdrawals come at a time when Bitcoin is already struggling. The cryptocurrency is on track for its worst monthly performance since the 2022 meltdown, a year marked by corporate collapses and the dramatic fall of FTX, once run by Sam Bankman-Fried.

Despite Bitcoin winning several regulatory and policy victories earlier this year in the US and other countries, market momentum has faded. The recent slump has worn out much of the positive sentiment that drove Bitcoin to new highs earlier in 2024.

Spot Bitcoin ETFs Deepen Market Volatility

Spot Bitcoin ETFs, introduced in January 2024, have become deeply intertwined with Bitcoin’s price movements. They act as self-reinforcing feedback loops:

• When prices rise, ETF inflows accelerate the rally.

• When prices fall, ETF outflows amplify the decline.

This cyclical relationship is a major contributor to the current downturn.

Every $1 Billion Outflow Hits Bitcoin Prices by 3.4%

Citi Research has quantified the direct impact of ETF outflows. Their study shows that Bitcoin prices drop by roughly 3.4% for every $1 billion withdrawn from Bitcoin ETFs. With billions already flowing out in November, the selling pressure has naturally intensified.

Citi’s Alex Saunders even set a bear-case year-end target of $82,000, assuming zero ETF inflows. With the current outflows far worse, analysts see room for further downside.

Linh Tran, analyst at XS.com, explained that earlier in the year, spot ETFs were the primary drivers of Bitcoin’s new record highs. But now, the sharp reversal of institutional capital has directly hurt Bitcoin prices.

Record ETF Trading Volumes Offer Mixed Signals

Interestingly, Friday recorded a major spike in ETF activity. Bitcoin ETFs saw record trading volumes of $11.5 billion, with BlackRock’s IBIT alone accounting for $8 billion. But despite the high trading activity, IBIT still saw outflows of $122 million, suggesting institutions are active but not necessarily bullish.

Ruck from LVRG Research said that while the strong trading volumes showed some demand, the continued redemptions indicate that institutional confidence has not yet returned.

Global Market Weakness Adding Pressure

Bitcoin’s slump is also connected to a broader pullback in global financial markets. Risky assets — from AI stocks to meme stocks — have been falling. The S&P 500 is headed for its worst month since March, and Bitcoin’s short-term correlation with tech stocks reached a record high in early November.

According to Lori Calvasina of RBC Capital Markets, the “choppy trends” in Bitcoin reflect market fatigue, and any stabilization in crypto could help calm nerves across US equity markets.

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