Bitcoin exchange-traded funds (ETFs) are poised to post their worst month of capital outflows since their launch.
The massive withdrawal is adding pressure to the already-tired cryptocurrency market, Bloomberg reports.
Since the beginning of November, investors have withdrawn $3.5 billion from U.S. spot Bitcoin ETFs. This figure is close to February's all-time low of $3.6 billion.
The market leader, BlackRock's IBIT fund (which controls approximately 60% of the sector's assets), bore the brunt of the blow. Investors withdrew $2.2 billion from it in November. Unless the trend reverses sharply, the fund will end the month with its worst performance in history.
The massive outflow comes amid weak performance for Bitcoin itself, which is also posting its worst monthly performance since the 2022 crypto industry crash (FTX bankruptcy).
"The outflow from IBIT confirms that the euphoria seen at the beginning of the year has completely faded," noted Nick Ruck, Director of LVRG Research.
Spot ETFs have become the leading indicator of sentiment in the crypto industry, forming a self-reinforcing mechanism: inflows accelerate price growth, while outflows exacerbate the decline.
Analysts at Citi Research have calculated this relationship: every $1 billion withdrawal from a Bitcoin ETF leads to a drop in the cryptocurrency's price of approximately 3.4%. Alex Saunders of Citi, who previously predicted a price decline to $82,000 by the end of the year, notes that the current massive outflow creates the conditions for an even deeper decline.
Bitcoin's situation reflects a broader trend of risk aversion. Risky assets—from artificial intelligence stocks to meme coins—are losing ground. The S&P 500 is also preparing for its worst month since March.