Bitcoin ETFs See Massive Outflows as Cryptocurrency Experiences Worst Correction Since 2022

B SUSINDRA REDDY's profile image
3 min read
Donald Trump visited a cryptocurrency-themed bar called Pubkey in New York City last September. (Photo by Spencer Platt/Getty Images) via Getty Images

Image credits: Donald Trump visited a cryptocurrency-themed bar called Pubkey in New York City last September. (Photo by Spencer Platt/Getty Images) via Getty Images

The bitcoin market has experienced a significant correction, with the price of the cryptocurrency briefly dipping to $78,411 early Friday, marking a 28% correction from its all-time high above $109,000. This correction has been attributed to a combination of factors, including broader macro uncertainty spurred by talk of widespread Trump administration tariffs and the recent hack of crypto derivatives exchange Bybit. As a result, investors who had piled billions into new bitcoin ETFs over the last year are now pulling some of that money back out. According to preliminary estimates from JPMorgan Chase, ETFs holding bitcoin experienced $2.7 billion in net outflows between Monday and Thursday. Estimates from Bloomberg put this week's outflows even higher. These outflows are a significant reversal from the surge in demand for bitcoin ETFs that was seen earlier in the year, when they were initially met with hungry demand from both everyday investors and major Wall Street institutions. The bitcoin ETFs were launched in early January 2024 and offered exposure to the largest cryptocurrency without having to own it, allowing investors to trade it like they would a stock. The products benefitted from a surge in the price of bitcoin for much of 2024 and early 2025, amid optimism about a more favorable approach to the crypto industry from the new presidential administration in Washington, D.C. However, this optimism is now being questioned, and the market is experiencing a "hangover" mode, according to Alex Thorn, head of research for crypto firm Galaxy Digital. Despite the outflows, bitcoin ETFs have still attracted over $30 billion in new money over the last year, with major players such as Abu Dhabi's sovereign wealth fund and the family office of Paul Tudor Jones holding significant positions. In fact, more bitcoin is currently held by these ETFs than any other single source, including public and private companies and governments, according to bitcoin holder tracking site BitcoinTreasuries. Industry watchers are not pinning the sell-off on any single culprit, but rather a mishmash of negative forces spurring poor vibes. Longtime crypto influencer Anthony Pompliano, CEO of Professional Capital Management, notes that bitcoin "is a volatile asset," and investors are "buying volatility. If you want bitcoin to go up, you've got to be OK with it going down sometimes." However, he also advises that investors should not be too worried, as the market is simply taking a breather. There are some signs that the outflows from the bitcoin ETFs are starting to slow, with outflows of $276 million on Thursday, compared to over $1 billion on Tuesday and $764 billion on Wednesday. However, analysts are warning that there could still be more volatility ahead for investors, with Fundstrat analyst Mark Newton predicting that bitcoin's current slump could continue into March, with a potential target of $60,000. In conclusion, the bitcoin market is experiencing a significant correction, with investors pulling out billions from bitcoin ETFs. While this correction is a reversal from the surge in demand seen earlier in the year, it is not entirely unexpected, given the volatility of the cryptocurrency market. Investors are advised to be cautious and prepared for potential further declines, but also to keep in mind that the market is simply taking a breather, and that smart money buys the blood, even if it's their own.

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