Journalist
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Key Takeaways
How deep was the ETF exodus?
Over $4 billion in outflows in the past four weeks as the market rout deepened.
Is a recovery still likely?
Yes, or at least an ease to the plunge if the ETF inflows trend extends into the new week.
Since late October, U.S. Spot Bitcoin ETFs have recorded four consecutive weeks of net outflows, averaging $1 billion each.
Such levels of investor exodus were last witnessed in early 2025. However, on the 21st of November, the products logged net daily inflows of $238.5 million.
Strangely enough, Bitcoin [BTC] slipped even lower to $80k on the said day, underscoring that some institutional demand resumed at that level. Per Bloomberg ETF analyst Eric Balchunas, the renewed ETF net inflows showed “boomers’ mettle.”
Source: X
Is a market relief getting close?
If ETF demand continues into the new week, a new base could potentially form at $80k. As of writing, the crypto asset traded above $86k, following the market’s repricing of the December Fed rate cut.
The odds of a potential 25 bps interest rate cut shot up to 71% from 55.6% after last Friday’s labour data.
Source: CME FedWatch
A week ago, market expectations shifted from a “50/50” to a “rate pause” position, a stance that Coinbase analysts called “mispriced.” According to them,
“If tariffs are tightening financial conditions and cooling demand, the Fed might not need to stay hawkish. This could open the door for earlier or larger rate cuts.”
But the market sentiment was still at an ‘extreme fear’ level around 10.
Worth pointing out that Fed rate cuts directly impact the overall cost of capital, which in turn affects risk assets, including crypto markets.
Hence, a positive development on this front could boost the market sentiment and recovery.
Still, Japan’s moves could directly impact the Fed’s actions, forming another macro factor worth watching.
On-chain signals hint at seller exhaustion
Swissblock analysts said their proprietary Risk-Off indicator reached 100, a level that previously aligned with local bottoms in July and September 2024.
They added,
“Every past extreme like this marked seller exhaustion and a major bottom, supported by steady spot demand. Even if the full bottom isn’t in yet, a technical relief is getting close.”
Source: Swissblock
However, the bottom also needs a strong demand, particularly from ETFs and treasury firms. With the improving Fed rate outlook, it remains to be seen whether ETFs will resume their bidding and support a potential recovery.