Bitcoin ETF sees $485 million outflow in a single day, and institutional demand plummets

According to Woofun AI, the cryptocurrency market continues to decline, and the US market's Bitcoin spot ETF and Ethereum spot ETF experienced the worst outflow of funds in months. According to SosoValue data, this phenomenon marks a sharp rise in risk aversion of institutional capital towards mainstream crypto assets, and market liquidity is shrinking rapidly.

On October 7, 12 listed Bitcoin ETFs on the US market lost a total of $484.9 million. This single-day outflow was the largest since June 25. BlackRock (BLK.US)'s iShares Bitcoin Trust (IBIT.US) had the largest outflow of $207.7 million, followed by Fidelity (FBTC.US) FBTC, which had outflows of $105.1 million, and ARK 21Shares (ARKB.US)'s ARKB.US had an outflow of $101.7 million.

At the same time, the outflow amount from the Ethereum ETF was also $160.9 million. Based on this calculation, the total loss over these five trading days has reached US$506.3 billion, the highest level since January of this year. BlackRock (BLK.US)'s ETHA (ETHA.US) took a share of $111.6 million in Wednesday's redemptions, while Grayscale's ETHE.US (ETHE.US) lost $25.8 million. Currently, these funds have experienced capital outflows for seven consecutive trading days, with a cumulative outflow of about US$569 million. On Wednesday alone, these two ETFs collectively lost around $646 million — Bitcoin's closing price fell to its lowest level in the past 20 days, below $83,000, while Ethereum's stock price fell back to around $2,500.

It is worth noting that this price trend coincided with factors such as rising US Treasury bond yields, the strengthening of the US dollar, and rising oil prices, further increasing the pressure on risky assets.

Earlier signs of capital outflows were already evident, and Bitfinex analysts had already noticed a weakening in institutional demand before the stock market fell on Wednesday. In an October 7 report, these analysts pointed out that the flow of funds in Bitcoin ETFs was becoming increasingly unstable, and investment slowed sharply after the September wave of purchases that drove prices back up. During the period when the Bitcoin price rose from $76,000 to $87,000 in mid-September, the daily net inflow averaged $341.7 million. However, in the five trading days prior to October 6, this figure dropped to around $35 million per day, and the five-day cumulative net inflow was only $172.9 million.

According to data compiled by Woofun AI, the remaining demand is also highly concentrated on BLK.US (BLK.US) IBIT (IBIT.US). The fund attracted $5362 million in capital inflows over these five days, while other competitive Bitcoin ETFs lost a total of $363.3 million.

This difference made the market increasingly reliant on one fund to offset redemption pressure in other sectors, and this support weakened when IBIT also joined the sell-off on Wednesday. The reason for this reversal is that the current price of Bitcoin is lower than the average cost of holding positions for ETF investors. Bitfinex estimates an average flow-weighted ETF cost of $84,318. Analysts have observed that usually when the price of Bitcoin is close to investors' overall break-even point, the daily net inflow falls to around $65 million. Bitcoin's closing price fell below $83,000 on Wednesday, meaning its price is below this threshold, increasing the possibility that further declines could trigger more investors to redeem their assets to control losses.

Although this value does not reflect individual investors' purchase prices, it can reflect the profitability of investing capital through these ETFs.

The Ethereum side is also showing signs of declining demand. In addition to ongoing ETF outflows, CryptoSlate has previously reported that demand for shorting in the derivatives market is increasing, and traders with short positions are paying fees to the bulls through negative perpetual contract financing rates.

This position situation shows that bearish traders are increasingly willing to bear the costs to continue holding positions and wait for the price to drop further, which also exacerbates the redemption pressure faced by Ethereum ETFs. Bitfinex also warned that the decline in institutional capital inflows is making the entire altcoin market increasingly dependent on the flow of funds between existing cryptocurrency positions.

If Bitcoin's downward momentum accelerates, investors trying to reduce risk may withdraw their capital from altcoins instead of shifting their funds to other digital assets, so smaller tokens will face greater risk.