On Monday, Bitcoin and Ethereum exchange-traded funds faced a significant setback, losing a total of $439 million. This decline erased a substantial portion of the inflows seen the previous week, as investors adjusted their strategies in response to the Federal Reserve’s anticipated rate cut and prepared for forthcoming inflation data. Bitcoin ETFs experienced significant outflows totaling $363.1 million, primarily driven by Fidelity’s FBTC, which saw a reduction of $276.7 million, alongside ARK 21Shares’ ARKB, which lost $52.3 million.
In the latest developments, Ethereum funds experienced significant outflows totaling $76 million. Fidelity’s FETH was at the forefront, suffering a loss of $33.1 million, while Bitwise’s ETHW followed with $22.3 million in redemptions, and BlackRock’s ETHA faced a decline of $15.1 million. Ali Martinez shared with Decrypt that Monday’s ETF redemptions were “largely driven by short-term positioning as traders adjusted to the Fed’s latest cut and upcoming inflation data. If Friday’s PCE report comes in cooler than expected, we could quickly see flows turn positive again.” Dean Chen, shared with Decrypt that “the outflows signal a phase of profit-taking and de-leveraging” rather than a structural bear market. “If ETF flows turn positive within the next 1–3 days, BTC could quickly rebound above $113,000 and ETH toward $4,200,” Chen stated. “Should outflows continue, BTC might revisit $108,000 while ETH could decline to $3,900.”
In the last 24 hours, over $354 million in cryptocurrency positions faced liquidation, with Bitcoin accounting for $44 million and Ethereum for $53 million. “ETF flows and derivatives leverage — the key signals for any sustained reversal,” Chen added, emphasizing the importance for investors to keep a close watch on these indicators. Ruchir Gupta, shared insights on the current market dynamics, stating to Decrypt that there is “an exit of leverage that had been built up over the last few weeks.” Bitcoin continued its downward trend from the weekend on Monday, leading to one of the most significant liquidation events of the year. Options traders are currently aligning their strategies with a bearish skew, expecting a continuation of the downtrend. The leading cryptocurrency experienced a decline of less than 4% on Monday, triggering the largest liquidation cascade of the year, which resulted in the elimination of approximately $1.65 billion in long positions and $145 million in short positions. In light of the recent fallout, implied volatility, a key indicator of future expectations in the options market…
In the midst of market fluctuations, he maintained that the overarching conditions for digital assets remain optimistic, highlighting the “Fed rate cut, S&P500 and NASDAQ at all-time highs, and the rise of digital asset treasuries.” Gupta further cautioned that a period of “healthy consolidation” could see the market reset from “excess leverage and positioning in the market.” In the face of short-term bearish sentiment, as the put-call delta skew reaches its peak since early August, options traders continue to express a sense of optimism for the fourth quarter.