Bitcoin ETFs Suffer Worst Outflow Since June Amid Macro Headwinds
Bitcoin exchange-traded funds (ETFs) experienced a significant outflow of $484.9 million on Wednesday, marking the largest single-day departure since June 25, according to data from Decrypt’s ETF tracker. BlackRock’s iShares Bitcoin Trust (IBIT) saw the steepest decline, with $207.7 million exiting the fund, followed by Fidelity’s FBTC, which recorded an outflow of $105.1 million.
This single trading session effectively reversed approximately 81% of the inflows accumulated over the preceding nine days, meaning nearly two weeks of consistent investor interest was wiped out in a single day. Despite this substantial outflow, the ETFs collectively still hold $57.8 billion in cumulative net inflows, indicating that while it was a challenging day for the funds, it does not represent a systemic crisis.
Analysts suggest the significant outflow is less a reflection of issues within the cryptocurrency market itself and more a consequence of broader macroeconomic factors. On Wednesday, the 30-year Treasury yield surged to approximately 5.7%, its highest level since 2002. Concurrently, Brent crude oil prices hovered around $100 per barrel, and stock markets retreated from record highs. Escalating tensions and attacks around the Strait of Hormuz, with at least one incident reported daily since October 2, have contributed to sustained high oil prices.
This macroeconomic environment presents a challenge for Bitcoin investors. Elevated oil prices can fuel inflation, which in turn may prompt the Federal Reserve to maintain a hawkish stance on monetary policy. A hawkish Fed typically leads to higher bond yields. For an asset like Bitcoin, which does not generate interest, this creates a less attractive proposition compared to, for instance, a 10-year Treasury bond yielding over 5% and without the volatility associated with crypto. This calculation is a key consideration for institutional and large-scale investors, whose decisions significantly influence market movements.
The Federal Reserve raised interest rates in September, the first such increase since 2023. Minutes from their most recent meeting, released on Wednesday, indicated that a majority of officials anticipate another rate hike before the end of the year. However, traders appear skeptical of this prospect, with current market indicators suggesting an October hike is unlikely. CME’s FedWatch tool places the probability of an October rate increase at 19.4%, while Myriad’s prediction markets estimate it at 17%.
Beyond the ETF market, Bitcoin’s price also experienced a downturn. On Thursday, the cryptocurrency fell to a low of $81,749.83, approximately 6% below its peak of $86,978 reached earlier in the week. The derivatives market bore the brunt of this decline, with roughly $429 million in positions liquidated over a 24-hour period. According to CoinGlass, 87.5% of these liquidated positions were long bets.
Historically, Bitcoin has seen gains in October for six consecutive years until last year, when it experienced a 3.69% decline. This year, the ETFs began October with $321.6 million in inflows over the first four sessions. However, they have since shifted to a net outflow of $163.3 million, with Halloween still 23 days away, leaving ample time for further market fluctuations.
The Federal Reserve is scheduled to convene next on October 27-28, followed by another meeting on December 8-9. The minutes released Wednesday did not specify a date for the next potential interest rate increase.
