On December 19, Bitcoin exchange-traded funds (ETFs) in the United States witnessed a substantial net outflow of $671.9 million, marking a new record for single-day outflows. This event brought an end to a 15-day streak of inflows for BTC ETFs and an 18-day streak for Ethereum ETFs.
Recent data from Farside Investors reveals that Fidelity’s FBTC saw the largest outflow, losing $208.5 million. Following closely behind were Grayscale’s GBTC and ARK Invest’s ARKB with outflows of $208.6 million and $108.4 million, respectively. Meanwhile, BlackRock’s IBIT ETF remained stable without any reported net outflows or inflows.
Market Volatility Adds to Crypto Price Declines
The surge in outflows coincided with sharp declines in the prices of Bitcoin and Ethereum. Bitcoin dropped by 9.2% within 24 hours, settling at around $93,145.17, while Ethereum experienced an even steeper decline of 15.6%. During this period, over $1 billion was liquidated from the overall crypto market.
According to Sosovalue data, the total net assets of Bitcoin ETFs plummeted to $109.7 billion by December 19, down from $121.7 billion just two days earlier. This significant drop erased most of the gains that had been made earlier in December.
This sell-off has underscored Bitcoin’s dominance in the crypto landscape, maintaining a market share of 57.4% despite the recent market turbulence.
Impact of Federal Reserve Policy and Economic Uncertainty
Amidst the crypto market downturn, broader macroeconomic concerns have also contributed to the negative sentiment. Investors were anticipating a 0.25% interest rate cut from the U.S. Federal Reserve, but comments from Fed Chair Jerome Powell hinted at a more cautious monetary policy outlook.
Powell’s indications of potentially just two rate cuts by 2025 signaled a slower pace of monetary easing than previously anticipated. This more hawkish stance from the Federal Reserve not only impacted traditional markets like the S&P 500, which experienced a decline, but also influenced sentiment in the crypto market as risk appetite shifted away from growth assets.
Rising Interest in “Buying the Dip” Amid Market Uncertainty
Despite the market’s downward trend, there has been an uptick in discussions surrounding “buying the dip” across various social media platforms. Data from Santiment revealed that mentions of this strategy reached their highest level in more than eight months.
The last notable peak in this sentiment occurred back in April when Bitcoin’s price fell from $70,000 to $67,000 before continuing its decline. While some traders remain cautious, the resurgence of these discussions suggests that a segment of investors still holds optimism regarding potential recovery opportunities within the crypto market.