Bitcoin and Ethereum exchange-traded funds recorded their largest outflows in crypto ETFs in over two weeks, totaling a combined withdrawal of $582.4 million this Monday. According to Farzam Ehsani, CEO of VALR, this movement responds to an institutional risk reduction strategy in the face of U.S. stock volatility and global monetary uncertainty. Institutional investors appear to be readjusting their portfolios given the current macroeconomic conditions.
The data breakdown reveals that spot Bitcoin ETFs suffered a net withdrawal of $357.6 million, marking the day of highest redemption since early December. Sales were distributed mainly among Fidelity, Ark, and Bitwise products, while BlackRock’s IBIT remained flat during the day, recording no significant flows. This negative trend highlights the caution that prevails among major asset managers.
On the other hand, Ethereum ETFs did not escape the selling pressure, recording withdrawals close to $225 million, the highest single-day figure since the start of the month. Although crypto asset prices remained within recent ranges, fund flows reflect how capital allocators are repositioning their bets. The behavior of flows suggests a direct correlation with other traditional risk assets.
Likewise, the monthly aggregate for Bitcoin shows a challenging landscape, with total outflows hovering around $705 million against smaller inflows. This leaves the market with a significant net reduction, despite having had some days with positive capital intake during December. The lack of sustained demand has characterized market behavior in recent weeks.
Is the crypto market tied to the fate of tech stocks?
Farzam Ehsani points out that Bitcoin is increasingly acting like a Nasdaq derivative in this fourth quarter, weakening aggressively when the tech sector corrects. This dynamic has caused ETF redemptions to track the pace of risk aversion in equities, rather than responding to specific crypto sector tensions. Institutions use these vehicles as the most efficient channel to adjust their exposure quickly.
However, the risk landscape has become more complex following the Federal Reserve’s recent decision and signals of a pause in the easing cycle. Uncertainty about inflation and lack of unity in the monetary policy committee have tightened financial conditions, raising Treasury bond yields. The increase in U.S. public debt yields puts pressure on risk assets.
Will the institutional base sustain a gradual demand recovery?
Despite current jitters and short-term volatility, Ehsani maintains a cautiously optimistic outlook for Bitcoin’s future in the long term. The global economy continues to experience liquidity expansion thanks to certain accommodative financial conditions, and selling pressure from long-term holders seems to be exhausting almost completely. Institutional fundamentals remain solid thanks to positions maintained in the ETFs.
Finally, the liquidity contraction typical of the holiday season is expected to continue affecting the market in the immediate short term. However, the base established by institutional investment could serve as a platform for a gradual recovery in demand once the current macroeconomic uncertainty dissipates. The stability of institutional holdings could be key to exiting the current market stagnation.
