Record outflows from Bitcoin exchange-traded funds (ETFs) are being interpreted by analysts at crypto exchange Bitfinex as short-term, "tactical" rebalancing rather than a sign of institutional investors abandoning Bitcoin (BTC).
According to Bitfinex analysts, the primary drivers behind the billions of dollars in ETF outflows and the broader market crash are long-term Bitcoin holders taking profits and selling their coins, along with the liquidation of highly-leveraged positions in the market.
Bitfinex also noted that uncertainty surrounding a potential December interest rate cut has contributed to investors adopting a risk-off sentiment.
“This does not derail the longer-term move towards institutionalization. The spot ETF channel remains intact, and the outflow likely reflects tactical rebalancing rather than a wholesale exit from the asset class.”
Bitfinex asserts that the fundamental outlook for Bitcoin remains strong, positioning it for continued institutional adoption as a store-of-value asset with robust long-term fundamentals. They view the current market downturn as a temporary price movement.
Bitcoin ETFs Experience Significant Outflows Amidst Market Declines
Bitcoin ETF outflows have surpassed $3.7 billion in November, extending the losses from October's crypto market crash and fueling investor concerns about the potential onset of a bear market.
BlackRock's iShares Bitcoin Trust (IBIT) ETF has seen the largest outflows, with redemptions exceeding $2.47 billion so far in November.
Bitcoin ETFs have recorded some of the most significant daily outflows on record during November. According to Farside Investors, single-day outflows surpassed $900 million on a recent Thursday.
Following Bitcoin's drop below $90,000, the average ETF investor is currently experiencing losses. However, Vincent Liu, chief investment officer at quantitative trading company Kronos Research, told Cointelegraph that this does not necessarily indicate that ETF investors will engage in panic selling.
Liu explained that Bitcoin ETF investors typically maintain a long-term perspective, often disregarding short-term market fluctuations and price movements.
Eric Balchunas, a senior Bloomberg ETF analyst, indicated that the majority of selling pressure is coming from long-term Bitcoin holders, often referred to as "whales" and "OGs," who possess the asset directly rather than through an investment vehicle.