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In summary
- Bitcoin spot ETFs faced record outflows of $671.9 million, led by GBTC with $208.6 million.
- Wintermute attributed the decline to pre-holiday sales and a change in the Fed’s tone.
- Analysts point to profit taking and high commissions as key factors behind the exits.
On Thursday, Bitcoin spot exchange-traded funds (ETFs) experienced record net outflows of $671.9 million—the highest recorded since their launch in January.
The Grayscale Bitcoin Trust (GBTC) lost the most capital at $208.6 million, followed by the ARK 21Shares Bitcoin ETF losing $108.4 million, according to data from Farside Investors. This exit coincided with a drop in the price of Bitcoin, which is trading below $93,000 at the time of writing after losing 9.2% over the 24 hours prior to publication, according to data from CoinMarketCap.
Leading crypto market maker Wintermute wrote in today’s note to investors that “after stabilizing at the start of yesterday’s session, spot prices fell following the US market open, driven by new rounds of selling.”
The crypto market apparently “mirrored declines in stocks and bonds” as traders decided to reduce their risk exposure “ahead of the typically low-liquidity holiday season,” Wintermute wrote.
The Federal Reserve was expected to cut rates by 25 basis points to between 4.25% and 4.50% at Wednesday’s Federal Open Market Committee (FOMC) meeting—the last this year.
“Prior to the FOMC meeting—widely anticipated as a ‘non-event’—the market was already showing signs of fragility,” which “translated into a downward move in spot as traditional markets reacted to what appeared to be a “change in tone from (Federal Reserve Chairman) Powell.”
“The immediate interpretation is that the FED has moved toward a more neutral stance by signaling a slowdown in the pace of rate cuts,” Wintermute noted.
Obchakevich Research founder Alex Obchakevich told Decrypt that he believes “investors will likely start taking profits due to the uncertainty caused by Fed policy.” He said that “the market expected more aggressive rate cuts in the future, but now the Fed’s projections suggest only two rate cuts in 2025 instead of four.”
Ajay Dhingra, Head of Research and Analysis at DeFi protocol Unizen, believes the outflows “were driven by profit-taking amid recent market volatility and a shift towards lower-fee alternatives.”
He highlighted that “Grayscale’s 1.5% annual management fee is notably higher than other ETFs, which typically charge 0.2-0.3%.” The comments follow reports this summer that GBTC lost more than 348,000 Bitcoin in just two quarters.
Still, Dhingra believes that a new catalyst for a Bitcoin bull run is near in the future. “The next catalyst for Bitcoin is the departure of SEC Chairman Gary Gensler on January 20,” he said. Dhingra also expressed concern that “increased regulatory scrutiny before his term ends could trigger a major sell-off.”
Edited by Stacy Elliott.
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