Bitcoin ETF Outflows Near $3 Billion, Poised for Worst Month Ever

Bitcoin ETFs Face Headwinds in November

Bitcoin exchange-traded funds (ETFs) are nearing a concerning milestone, potentially closing out November with nearly $3 billion in net outflows. This development is fueled by BlackRock's fund experiencing its largest single-day redemptions on record, raising questions about the future of these investment vehicles.

According to data from Farside Investors, US spot Bitcoin (BTC) ETFs extended their five-day losing streak on Tuesday, registering another $372 million in net negative outflows. BlackRock's iShares Bitcoin Trust (IBIT) ETF was particularly affected, recording $523 million in outflows, marking its largest since its debut in January 2024.

These latest outflows bring November's total to $2.96 billion, already positioning it as the second-worst month for spot Bitcoin ETFs. Notably, BlackRock alone accounts for $2.1 billion of these outflows.

Another week of selling pressure could push redemptions past the $3.56 billion seen in February, which would represent the weakest month for ETF flows, despite the historical tendency for November to be a strong period for Bitcoin.

Impact of Outflows on Bitcoin Price

Recently, Standard Chartered's global head of digital assets research, Geoff Kendrick, told Cointelegraph that spot Bitcoin ETF inflows were a primary driver of Bitcoin's momentum in 2023. Therefore, continued outflows could place downward pressure on Bitcoin's price.

Despite investor expectations of an upside month for Bitcoin based on historical data, the ETF outflows have continued to mount. November is historically the best month for Bitcoin returns, with BTC averaging a 41.22% rally during the month, according to CoinGlass data.

A Look at Other Crypto ETFs

Looking at other crypto funds, the Ether (ETH) ETFs recorded $74.2 million in outflows on Tuesday, while the Solana (SOL) ETFs attracted $26.2 million in inflows, surpassing $421 million in total investments since launch, according to Farside Investors.

Falling Rate Cut Odds Weigh on Sentiment

Bitcoin printed its fourth "death cross" of this cycle last week, a technical chart pattern that emerges when an asset's short-term price momentum indicators fall below the long-term trend.

While historically considered a "bearish technical signal," the death cross can also signal a macro bottom ahead of a strong reversal, depending on the wider economic context, as Lacie Zhang, research analyst at Bitget Wallet, explained to Cointelegraph.

Currently, the signal arrives at a moment when liquidity is only beginning to stabilize, December rate-cut odds have fallen from near-certainty to ~50%, and market risks remain unresolved.

Crypto-Specific Concerns

Some crypto-specific concerns included a warning from Bitmine Immersion's chairman, Tom Lee, who stated that two major market makers are facing financial deficits, as the analyst explained.

Meanwhile, markets are pricing in a 46% chance of a 25 basis point rate cut during the Federal Reserve meeting on Dec. 10, down from 93.7% a month ago, according to the CME Group's FedWatch tool.

"Smart Money" Turns Short

This development has inspired a repositioning among the industry's most successful traders, tracked as "smart money" traders on Nansen's blockchain intelligence platform, towards a short-term downside.

Smart money traders have added $5.7 million worth of cumulative short positions in the past 24 hours, signaling downside expectations, as this cohort was net short on Bitcoin for $275 million, according to Nansen.