U.S.-listed spot bitcoin and ether exchange-traded funds (ETFs) experienced substantial redemptions on Thursday, with nearly $1 billion withdrawn in a single session as cryptocurrency prices fell significantly and investor risk appetite diminished. According to data from SoSoValue, investors withdrew $817.9 million from U.S. spot bitcoin ETFs, marking the largest daily outflow since November 20. Ether ETFs were not spared either, witnessing a loss of $155.6 million on that day.
This wave of outflows coincided with a drastic decline in cryptocurrency values. Bitcoin dipped below $85,000 and continued to slide toward $81,000 during U.S. trading hours, ultimately nearing the $83,000 level in Asian morning hours on Friday. Ether, on the other hand, experienced a drop of more than 7% for the day.
Among the funds affected, BlackRock’s IBIT suffered the most significant redemptions, losing $317.8 million. Fidelity’s FBTC saw withdrawals amounting to $168 million, while Grayscale’s GBTC recorded $119.4 million in outflows. Smaller ETFs such as those from Bitwise, Ark 21Shares, and VanEck also experienced notable losses.
Ether ETFs showed a similar trend, with BlackRock’s ETHA losing $54.9 million and Fidelity’s FETH seeing $59.2 million exit. Grayscale’s products linked to ether continued to deplete, bringing total ether ETF assets down to $16.75 billion, a decrease from more than $18 billion earlier this month.
The simultaneous selling across both bitcoin and ether ETFs suggests that institutional investors are opting to reduce their overall exposure to cryptocurrencies rather than simply switching between different assets. This represents a notable shift from earlier in January when inflows into ether funds frequently compensated for weaknesses seen in bitcoin products.
The selloff was exacerbated by rising volatility across the broader market and renewed uncertainty regarding U.S. economic policy. Analysts have indicated that the candidacy of Kevin Warsh for the Federal Reserve’s leadership position appears bearish for bitcoin, further contributing to market unease.
As implied volatility increased and equities showed weakness, the sentiment in the crypto market became more fragile. This atmosphere added pressure on spot prices as leveraged positions were unwound aggressively.
Currently, ETF flows seem to be closely following price movements rather than leading them. Many analysts anticipate that as long as bitcoin and ether prices remain under pressure, ETF demand is likely to remain weak, with many investors opting to hold back until market volatility stabilizes.
Andri Fauzan Adziima, the Research Lead at Bitrue, commented on the situation, noting that the decline of bitcoin to $81,000 was influenced by a “risk-off” wave, including a hawkish stance from the Federal Reserve about interest rates, substantial outflows from spot BTC ETFs, geopolitical tensions, and fluctuations in gold and silver prices. He articulated that this scenario led to massive leveraged liquidations after a critical support level was breached, which created a self-reinforcing sell-off in an environment of thin liquidity. Adziima ultimately described the current environment as a leverage shakeout driven by macro pressures, rather than an indication of the onset of a bear market, suggesting there is potential for a rebound if key support levels are maintained.
