In a recent development concerning the broader market’s speculation about future interest rate changes, investors pulled a staggering $680 million from Bitcoin ETFs on Thursday. This marked the largest single-day outflow since these investment vehicles received the green light earlier this year in January.
Turning our attention to major players like Grayscale and Bitwise, their Bitcoin ETFs saw significant declines of about 8% following the release of updated economic forecasts by the Federal Reserve earlier this week. This decline corresponded with Bitcoin’s price dropping another 5% to hover around $97,400 by the week’s end. The Fed’s revised projections now suggest just two quarter-percent rate cuts in the next year, down from the four that were anticipated during their September meeting.
When examining Bitcoin ETFs, particularly Grayscale’s and Bitwise’s, it’s clear they’ve been hit hard, dropping around 8% since the Fed unveiled this new guidance. In comparison, Bitcoin itself has seen a nearly 9% downturn in the same time frame. It’s worth noting that Thursday’s outflows shattered a 15-day streak of consecutive inflows, during which the twelve U.S. Bitcoin ETFs collectively attracted nearly $5.3 billion.
At the start of this week, Bitcoin reached a new peak, exceeding $108,000 briefly. However, by Thursday, it slipped below the $100,000 threshold— a stark contrast to its earlier dip to $92,000 before recovering slightly to around $100,000. The downturn in the market is largely fueled by the Fed’s cautious stance and could also be influenced by institutional investors engaging in seasonal profit-taking.
Market experts are sounding the alarm for a continued sell-off in the cryptocurrency space. Joseph Dahrieh from Tickmill noted that this downturn could heavily impact market sentiment. “Bitcoin’s dip below the USD 100,000 marker could lead to short-term volatility and increased downside risks,” he explained.
The situation is further complicated by large-scale liquidations in both long and short positions, which amounted to over $240 million within a single day. Antonio Di Giacomo of XS.com remarked that the Fed’s signal of fewer rate cuts in 2025 has cast a shadow of doubt and speculation across the markets.
Looking ahead, market watchers suggest that the sell-off might persist over the short term. Alex Kuptsikevich, with FxPro, suggested that the total market cap for cryptocurrencies might fall below $3 trillion, a decrease from the $3.7 trillion peak earlier this month. He warned that a drop below $94,500 could end the six-week uptrend, while a descent under $92,000 would pull the price beneath the 50-day moving average, tipping the scales in favor of the bears.
At the time of writing, Bitcoin has managed to stabilize slightly above $97,400, even after suffering a 4% loss in the past 24 hours. Featured image courtesy of DALL-E, with chart insights from TradingView.com.
