Bitcoin ETF "bleeding" continues! Investors withdrew $3.5 billion in a single month, approaching historical record outflows.

The Bitcoin ETF listed in the United States is facing the most severe monthly outflow of funds in nearly two years, putting greater pressure on the already weak cryptocurrency market. Compiled data shows that investors have withdrawn a total of $3.5 billion from such funds since November, nearly matching the all-time high monthly outflow record of $3.6 billion set in February. Among them, the Bitcoin ETF-iShares (IBIT.US) under BlackRock, Inc. (which accounts for approximately 60% of the total assets in this category) has seen redemption of $2.2 billion this month, which, unless there is a significant turnaround, will mark its worst monthly performance. At a time of fund outflows, Bitcoin itself is also facing its most challenging monthly trend since the cryptocurrency industry collapse in 2022marked by the collapse of Sam Bankman-Fried's FTX, which triggered a series of corporate bankruptcies. Despite some improvement in the global policy environment this year, the entire cryptocurrency market has still significantly contracted in recent times. Nick Ruck, Director of LVRG Research, pointed out, "The outflow of funds from IBIT confirms that the market's fervor earlier this year has been almost completely exhausted." The price of Bitcoin fell to $80,553 last Friday, and although there was a slight rebound over the weekend, as of writing, the digital currency is at $86,020, with a total decline of 8% for the year. Since its introduction in January 2024, the spot Bitcoin ETF has become a barometer of market sentiment in the cryptocurrency market, reshaping the way funds enter and exit this asset class, and forming a self-reinforcing feedback loop: when prices rise, funds flow in faster, and when prices fall, outflows intensify. A study by Citigroup quantified this phenomenon: for every $1 billion outflow from Bitcoin ETFs, the price falls by an average of 3.4%, and vice versa. Citigroup analyst Alex Saunders said that this mechanism explains the recent pullback in Bitcoin. He previously predicted that if there were no further inflows into ETFs, the year-end target price for Bitcoin could drop to $82,000, and the actual outflow of several billion dollars indicates that there is still further room for downside. Linh Tran, market analyst at XS.com, said, "In the first half of the year, the spot ETF was a key driver behind Bitcoin hitting historic highs, but now institutional funds are flowing out instead of continuing to flow in, which has had a significant negative impact on prices." It is worth noting that last Friday, the daily trading volume of Bitcoin ETFs reached $11.5 billion, setting a new record, with BlackRock, Inc.'s IBIT accounting for $8 billion of that, but there was still an outflow of $122 million that day. Ruck's analysis suggests that despite the huge trading volume "briefly sending a demand signal," the ongoing redemptions from IBIT reflect a "clear shift in institutional preferences away from leading industry products, indicating that market confidence has not fully recovered." BlackRock, Inc. did not comment on this. Looking at the broader financial market background, various high-risk assets, from AI concept stocks and meme stocks to high-volatility momentum trading, are experiencing pullbacks. The S&P 500 index is experiencing its worst monthly performance since March, and at the beginning of this month, the short-term correlation between Bitcoin and technology stocks reached a historic high. Lori Calvasina, Head of U.S. Equity Strategy at Royal Bank of Canada Capital Markets, wrote in a report, "We have viewed the fluctuating trend of Bitcoin since the summer as a signal of market fatigue. Although the reasons for the decline are not yet clear, if these types of assets can stabilize, it may help alleviate some of the tension in the U.S. stock market."