Dado Ruvic/Reuters
Crypto investors pulled a record amount from bitcoin exchange-traded funds on Thursday as selling pressure intensified after markets recalibrated expectations for rate cuts in 2025.
Spot bitcoin ETFs saw $680 million in outflows on Thursday, the largest volume recorded in a single day, according to trading data compiled by Bloomberg.
Bitcoin, meanwhile, steepened its decline, with the losing another 5% to trade around $96,000 Friday morning.
The outflows come alongside a broader sell-off in risk assets, with traders rattled midweek by the Fed's updated outlook for interest rates in 2025.
The Fed's Summary of Economic Projections showed that officials now see just two quarter-point cuts in the coming year, down from four rate cuts the central bank had projected at its September meeting.
Popular spot bitcoin ETFs, like Grayscale's Bitcoin Trust ETF and Bitwise's Bitcoin ETF, have dropped around 8% from the open on Wednesday, the day Fed officials released their new rates guidance.
Bitcoin, meanwhile, has lost about 9% in that time. The crypto dropped below $100,000 on Thursday after climbing to a record above $108,000 earlier this week.
While markets broadly are feeling bearish after the Fed meeting, the crypto plunge could also be due to seasonal profit taking. Institutional investors are likely cashing in some of the stellar gains bitcoin has notched this year. Even after this week's sharp slide, the top token is up more than 125% year-to-date.
However, the selling could add more pressure to the market, Joseph Dahrieh, managing principal at the online broker Tickmill, said.
"This decline could weigh strongly on the cryptocurrency and broader market sentiment, particularly as Bitcoin fell below the USD 100,000 mark, indicating potential short-term volatility and downside risks," Dahrieh said in a note Friday morning.
"This bearish movement was driven by massive liquidations, totaling over USD $240 million in long and short positions within 24 hours," Antonio Di Giacomo, a senior market analyst at XS.com, said in a separate note. "The Federal Reserve's cautious stance in signaling fewer cuts for 2025 created an atmosphere of doubt and speculation."
The sell-off in crypto could continue over the near term, according to Alex Kuptsikevich, the chief market analyst at FxPro. He speculated that the total market cap of crypto could drop below $3 trillion, down from a peak of $3.7 trillion earlier this month, according to CoinMarketCap data.
"A failure below $94.5K would signal a break of the uptrend of the last six weeks, while a fall below $92K on Friday or below $93K by the end of the week would bring the price under the 50-day moving average. In this case, time is playing on the side of the bears," he said.
