Spot Bitcoin ETFs Bleed $195M. Are Institutions Exiting BTC?

Spot Bitcoin ETFs just recorded their worst day in two weeks, and the numbers tell a story that’s making investors nervous. On Thursday, these investment vehicles recorded net outflows of $194.6 million. BlackRock’s IBIT took the hardest punch with $112.9 million walking out the door.

Thursday’s exodus marks the worst single-day performance since November 20. Traders around the world are taking notice.

The Big Players Are Pulling Back

Fidelity’s FBTC wasn’t far behind, bleeding $54.2 million. VanEck’s HODL, Grayscale’s GBTC, and Bitwise’s BITB also joined the exodus. Together, they paint a picture that’s hard to ignore.

Trading volume dropped like a stone too. From $5.3 billion on Tuesday to just $3.1 billion on Thursday. That’s a 40% collapse in 48 hours.

Bitcoin itself? Down 1.4% to $91,989 as of early Friday morning EST. The world’s biggest cryptocurrency briefly kissed $84,000 earlier this week before clawing its way back. That volatility is making even seasoned traders sweat.

What’s Actually Driving This?

Nick Ruck from LVRG Research isn’t buying the panic narrative. He told reporters the outflows are mainly basis trade unwinds. When the futures-spot spread compressed below breakeven, arbitrageurs had no choice but to sell.

Ruck said traders are “watching upcoming U.S. inflation data and the Federal Reserve’s rate decision closely.”

The Fed cut rates by 25 basis points on December 18. The new target range sits at 4.25-4.5%. But they surprised markets with their 2025 outlook. Only two more cuts are planned instead of the four they mentioned in September. That shift caught people off guard and hit risk assets hard.

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The Supply Squeeze Nobody’s Talking About

Timothy Misir from BRN shared something worth noting. Exchange balances have dropped to about 1.8 million BTC. That’s the lowest level since 2017, per CryptoQuant and Glassnode data.

“The market opened with quiet strength,” Misir said. “Accumulation is persistent, supply is thinning on exchanges, and price is stabilizing above the True Market Mean.”

So what’s missing? A clean breakout into the $96K-$106K range. Until that happens, we’re stuck in this limbo.

December’s Been Brutal

This $195 million exit is just one piece of a larger puzzle. Bitcoin ETFs faced record outflows of $671.9 million on December 19, according to Farside Investors data. That was the single worst day of 2024.

By December 30, another $426 million had walked away. Fidelity led that retreat with $154.64 million in exits. BlackRock’s IBIT, which everyone called the “greatest ETF launch in history,” saw its tenth outflow since inception.

Despite this recent bloodbath, spot Bitcoin ETFs still pulled in $35.65 billion throughout 2024. That’s massive. These products launched in January, and by mid-December, they nearly matched gold ETFs’ $128 billion in total net assets.

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Ethereum is Having a Different Month

While Bitcoin funds are struggling, Ethereum ETFs posted $41.6 million in net outflows on Thursday. Nothing compared to Wednesday’s $140.2 million inflow streak. Grayscale’s ETHE led Thursday’s exits with $30.9 million.

The interesting part? Ethereum ETFs actually thrived in December’s final weeks. They logged $2.56 billion in net inflows during a five-week winning streak that ended December 27.

What Comes Next?

The Federal Reserve held rates steady at 4.25-4.5% during their January meeting. Now traders are watching the next FOMC gathering on December 9-10. Market expectations lean toward another pause as the Fed assesses economic data under the Trump administration.

Trump’s tariffs, tax cuts, and immigration policies continue raising inflation concerns. That puts the Fed in an awkward position. More rate cuts become harder to justify when prices are climbing.

For Bitcoin, this creates an uncomfortable environment. The cryptocurrency needs liquidity to thrive. Higher rates and tighter monetary policy don’t exactly scream “buy risk assets.”

But there’s another side to this coin. If that 1.8 million BTC exchange balance number is accurate, we’re looking at the tightest supply in seven years. Basic economics says when supply tightens and demand eventually returns, prices move up.

The question isn’t whether institutions are exiting. The data shows some clearly are. The real question is whether this is profit-taking after an incredible year or the start of something more concerning.

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Why are Spot Bitcoin ETFs seeing outflows? 

Multiple factors are at play. Basis trade unwinding as futures-spot spreads compressed, profit-taking after a strong year, and uncertainty around Federal Reserve policy are the main drivers. Market volatility is forcing traders to reduce exposure.

Which Bitcoin ETF had the largest outflows? 

BlackRock’s IBIT led Thursday’s outflows with $112.9 million, followed by Fidelity’s FBTC with $54.2 million. However, on December 30, Fidelity saw the largest single-day exit with $154.64 million.

Are institutions completely leaving Bitcoin? 

Not completely. Short-term selling is happening now, sure. But Bitcoin ETFs pulled in $35.65 billion during 2024. Exchange balances hit a seven-year low, meaning long-term holders are buying and moving coins off exchanges. This reads more like portfolio adjustment than mass panic.

How does the Fed rate decision affect Bitcoin ETFs? 

The Fed cut rates by 25 basis points in December but only expects two more cuts in 2025, down from four cuts projected earlier. This “higher for longer” approach means less liquidity flowing into risk assets like Bitcoin. Institutions get more cautious when borrowing costs stay elevated.

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