Bitcoin ETFs face "darkest moment": $3.5 billion outflow in a single month, worst performance since listing

Bitcoin ETFs have experienced their worst monthly outflows since their launch nearly two years ago, adding more pressure to an already sluggish cryptocurrency market. Data shows that investors withdrew $3.5 billion from U.S.-listed Bitcoin ETFs in November, nearly matching the record $3.6 billion monthly outflow set in February this year. Of particular note, BlackRock's Bitcoin fund IBIT, which accounts for about 60% of assets in such ETFs, saw $2.2 billion in redemptions in November, meaning unless there is a sharp turnaround, it will record its worst monthly performance ever. This outflow confirms that "the frenzy seen earlier this year has completely faded," said Nick Ruck, director of LVRG Research. Bitcoin itself is on track for its worst monthly performance since the cryptocurrency industry's collapse in 2022, when various companies went bankrupt, culminating in Sam Bankman-Fried's FTX implosion. ETF Outflows and Price Declines Form a Self-Reinforcing Cycle Since their launch in January 2024, spot Bitcoin ETFs have become a barometer of crypto market sentiment, reshaping the flows of capital into and out of this asset class. They also form a self-reinforcing feedback loop: inflows tend to accelerate as prices rise, while outflows amplify declines when prices fall. Citi Research shows that for every $1 billion outflow from Bitcoin ETFs, the price drops by about 3.4%, and vice versa. Citi's Alex Saunders recently set a year-end bear market target of $82,000 (assuming zero inflows). Billions of dollars have already been pulled from the ETF group, implying further room for decline. Rebecca Sin, Senior ETF Analyst at Bloomberg Intelligence, said: "As the market continues to fall and volatility rises, we may continue to see more outflows, especially considering gold’s current trading position." She also noted that some outflows may stem from hedge funds closing a popular strategy called basis trading, which exploits the price difference between spot and futures markets. Last Friday, Bitcoin ETFs saw a record $11.5 billion in trading volume. BlackRock's IBIT alone accounted for $8 billion, and saw $122 million in outflows. While this trading volume "shows brief signs of demand," IBIT’s redemptions highlight "a meaningful shift in institutional preferences away from category leaders, indicating that confidence has yet to fully return," said LVRG's Ruck. BlackRock declined to comment on the outflows. Risk Warning and Disclaimer The market involves risks, and investments should be made with caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment decisions made based on this article are at your own risk.