In a historic turn for Bitcoin exchange-traded funds (ETFs) in the United States, December 19 saw a staggering $671.9 million in net outflows, the largest single-day loss since their inception. This abrupt exit ended a 15-day inflow streak for Bitcoin ETFs and an 18-day streak for Ethereum ETFs, highlighting increased market volatility.
Major Players Hit Hard
Fidelity’s FBTC bore the brunt, losing $208.5 million, while Grayscale’s GBTC and ARK Invest’s ARKB followed closely with outflows of $208.6 million and $108.4 million, respectively. Interestingly, BlackRock’s IBIT ETF reported no net outflows or inflows, suggesting a more stable investor base amidst the market chaos.
Price Declines and Market Sell-Off
The record outflows coincided with a steep sell-off in the broader cryptocurrency market. Bitcoin tumbled 9.2%, settling around $93,145.17, while Ethereum suffered an even sharper decline of 15.6%. The market rout resulted in over $1 billion in liquidations, erasing much of the gains made earlier in December.
According to Sosovalue, the total net assets of Bitcoin ETFs plummeted from $121.7 billion to $109.7 billion in just two days. This marked a significant contraction, emphasizing the fragility of the crypto market under macroeconomic pressures.
Macro Factors and Federal Reserve’s Hawkish Stance
Investor sentiment was further dampened by comments from Federal Reserve Chair Jerome Powell, who hinted at a slower-than-expected pace of interest rate cuts in 2025. This hawkish outlook spooked markets, with traditional assets like the S&P 500 also experiencing declines.
The cautious stance from the Federal Reserve compounded existing uncertainties, driving investors to reassess risk exposure across asset classes, including cryptocurrencies.
Optimism Amidst Uncertainty
Despite the turbulence, “buy the dip” sentiment surged across social media. Data from Santiment revealed a significant spike in mentions of dip-buying, the highest since Bitcoin’s price dropped in April. This optimism suggests that a segment of investors views the downturn as an opportunity for accumulation.
💸 With Bitcoin falling as low as $95.5K today, the ratio of crypto discussions that are about buying crypto's dip has reached its highest level in over 8 months. The last time we saw the crowd nearly this enthusiastic about dip buying was the major crash on August 4th. Since… pic.twitter.com/39NlpnGMCs
— Santiment (@santimentfeed) December 20, 2024
While the immediate outlook remains uncertain, the resilience of Bitcoin’s market dominance at 57.4% underscores its enduring appeal. For now, the crypto market remains at the mercy of macroeconomic trends and investor sentiment, with recovery contingent on broader market stabilization.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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