Will Bitcoin ETF Outflows Trigger Further Crypto Market Crash?

Spot Bitcoin ETFs in the United States have recorded six consecutive days of outflows highlighting a sharp drop in institutional interest. On Tuesday, the net outflows stood at a staggering $937 million, marking the biggest single-day outflows since inception. The outflows have escalated as BTC price loses its crucial support levels falling all the way under $88,500 while extending its weekly losses to more than 7.52%, leading to an overall crypto market crash.

Bitcoin ETF Outflows Shake Investor Sentiment

Amid the crypto market crash and BTC price losing crucial support levels, US Bitcoin ETFs have witnessed a surge in outflows over the past week. The Bitcoin exchange-traded product (ETP) market experienced its largest-ever single-day net outflow, with 14,579 BTC withdrawn globally, according to Velte Lunde, Head of Research at K33 Research.

Lunde further added that the ETFs have faced sustained selling pressure throughout February with 69% of the month’s trading days seeing net outflows. This trend underscores a consistent reduction in investor exposure to Bitcoin ETFs, reflecting cautious market sentiment amid broader crypto market volatility.

On Tuesday, Fidelity’s FBTC led the total ETF outflows with $344 million while BlackRock’s IBIT saw $144 million in outflows, as per data from Farside Investors. Fidelity has also recorded outflows for six consecutive days in a row. Investors have pulled $1.7 billion from cryptocurrency exchange-traded products (ETPs) and exchange-traded funds (ETFs) this week so far.

Bitcoin Exchange Inflows Surge, BTC Price Crash to $70K Imminent?

CryptoQuant analyst Amr Taha reported a notable spike in Bitcoin exchange activity, with the “Exchange Inflow (Top 10)” metric exceeding 5,000 BTC three times in a single day following the release of the U.S. Consumer Confidence report.

Consumer confidence in the U.S. has dropped to an eight-month low, driven by growing concerns over inflation and the impact of new tariffs introduced under the second Trump administration. The increased inflows suggest potential selling pressure as large holders or institutions may be moving Bitcoin to exchanges for liquidation. This could potentially trigger further outflows from Bitcoin ETFs ahead.

BitMEX co-founder Arthur Hayes has suggested that Bitcoin could retrace to pre-election levels between $70,000 and $75,000 if former President Donald Trump fails to pass his proposed budget, which includes increased spending and a debt ceiling hike.

“This is a test of how strong Trump’s hold is on the Republican Party,” Hayes stated, advising market participants to “chill out, retrace, and wait” as the situation unfolds. As of press time, BTC price is trading at $88,488 with daily trading volumes dropping to $68 billion.