U.S. Bitcoin ETFs see record $671.9M outflow amid crypto market turmoil

• Bitcoin ETFs face $671.9M outflow, ending a 15-day streak as crypto prices plummet.
• Fidelity, Grayscale lead ETF sell-off as $1B is liquidated across the crypto market in 24 hours.

 Bitcoin’s [BTC]exchange-traded funds (ETFs) in the United States experienced a record-breaking single-day net outflow of $671.9 million on December 19. 

This marks the largest outflow since their launch and ended a 15-day streak of inflows for BTC ETFs and an 18-day streak for Ethereum [ETH]  ETFs.

Data from Farside Investors shows that Fidelity’s FBTC led the outflows, losing $208.5 million. Grayscale’s GBTC and ARK Invest’s ARKB followed with outflows of $208.6 million and $108.4 million, respectively.

In contrast, BlackRock’s IBIT ETF remained unchanged, with no reported net outflows or inflows.

Market sell-off accompanies crypto price drops

The record outflows coincided with sharp declines in Bitcoin and Ethereum prices. Bitcoin dropped 9.2% in the last 24 hours, settling around $93,145.17, while Ethereum experienced a steeper 15.6% decline. Over $1 billion was liquidated across the crypto market in this period.

Sosovalue data revealed that the total net assets of Bitcoin ETFs dropped to $109.7 billion as of the 19th of December, down from $121.7 billion just two days earlier. This sharp decrease erased most of the gains seen earlier in December.

The sell-off reinforced Bitcoin’s dominance in the crypto market, which stood at 57.4%, maintaining its position as the leading asset despite the recent turbulence.

Federal Reserve policy and broader economic concerns

The sharp downturn in crypto markets has also been linked to broader macroeconomic concerns. Investors anticipated a 0.25% interest rate cut from the U.S. Federal Reserve, but comments from Fed Chair Jerome Powell suggested a more cautious outlook. 

Powell indicated that only two rate cuts may occur in 2025, signaling a slower pace of monetary easing than expected.

The hawkish sentiment from the Federal Reserve also affected traditional markets, with the S&P 500 seeing a decline. Analysts believe this uncertainty may have further pressured the crypto market, as risk sentiment shifted away from growth assets.

Increased “buy the dip” sentiment amidst market uncertainty

Despite the market downturn, a surge in “buy the dip” discussions was observed across social media platforms. Data from Santiment showed that mentions of “buying the dip” reached their highest level in over eight months.

Source: X

The last time this sentiment peaked was in April, when Bitcoin’s price fell from $70,000 to $67,000, before continuing its decline. 

Read Bitcoin’s [BTC] Price Prediction 2024-25

While some traders remain cautious, the renewed discussions suggest that a portion of investors remain optimistic about potential recovery opportunities in the crypto market.