Investors Withdraw $1bn from Bitcoin ETFs as Prices Plummet
Bitcoin ETFs witnessed unprecedented outflows on Tuesday, totaling $934 million, as the cryptocurrency experienced a decline to its lowest price of 2025. The outflows are largely attributed to investors unwinding futures positions amid decreasing demand, leading to projections of potential further decreases in Bitcoin’s value.
On Tuesday, Bitcoin ETFs experienced record outflows amounting to $934 million, the highest ever recorded in a single day, as investors began to unwind their basis trades. This occurred concurrently with Bitcoin slumping to a new low for 2025, marking a significant shift from the previous trend where spot Bitcoin ETFs were attracting billions due to Bitcoin’s rise to $108,000.
Arthur Hayes, co-founder of BitMEX, attributed the outflows to the unwinding of futures positions at the CME, prompted by basis compression. This phenomenon indicates that investors capitalizing on price discrepancies between ETFs and futures are now reassessing the profitability of their trades, leading to increased sales and further declines in Bitcoin’s price.
Signs of decreasing demand among institutional investors were evident, as analysts from JPMorgan pointed out that Bitcoin futures were nearing backwardation, where the spot price exceeds that of futures contracts. This scenario is reflective of comprehended weakness in demand and sets off a feedback loop that pushes Bitcoin’s price lower, inducing additional ETF redemptions.
Many investors purchasing Bitcoin ETFs are not long-term holders, with approximately 56% of activity associated with arbitrage strategies, according to 10x Research. These market dynamics have resulted in substantial losses for ETF investors, who had purchased shares around an average price of $96,500, as highlighted by Geoffrey Kendrick from Standard Chartered.
Projections by Kendrick suggest Bitcoin could potentially approach $80,000, while Hayes posits even lower declines, estimating a drop to $70,000. However, some analysts at 10x Research believe that the unwinding of hedge fund trades will not notably affect Bitcoin’s price, stating that simultaneous buying of futures will mitigate directional market impacts.
In summary, the Bitcoin market is currently experiencing significant volatility as evidenced by record ETF outflows connected to investors unwinding their positions. The decline in Bitcoin’s price, along with shifting futures contract dynamics, points to a challenging environment for institutional investors. Predictions surrounding future prices remain varied, with concerns of further declines amidst prevailing market conditions.
Original Source: www.dlnews.com
Post Comment