Cryptocurrency exchange products last week suffered the heaviest withdrawals since February, pushing global outflows to $2 billion as investors retreat amid growing macroeconomic uncertainty.
This outflow was punctuated by record single-day withdrawals from IBIT, BlackRock's flagship Bitcoin ETF, with $463.1 million leaving the fund on November 14, according to data from Pharcyde Investors.
The wave of redemptions led to significant declines in Bitcoin and Ethereum ETPs, resulting in a decline in assets under management across digital asset products.
Nansen research analyst Nikolai Sondergaard said the mechanism behind the flow is simple. “The market has been down recently and we expect to see some outflows from ETFs as people want to take money out of the market,” he said. decryption.
He added that capital flows are likely to remain tied to the macroeconomic direction. “Depending on where the market goes, which will likely depend on broader macro factors and policy, ETF outflows will either continue or come back if the market improves.”
3 week spill
A look at the size of the ETF market illustrates last week's turmoil. According to Coinshares' weekly report, the digital asset ETP peaked at $264 billion in early October, but assets under management have now fallen by 27% to $191 billion. Last week was the third consecutive week of outflows, with a total of $3.2 billion.
A combination of hawkish monetary policy expectations, crypto-native whale selling, and a broader risk-off movement has forced global investors to avoid risk, with Bitcoin and Ethereum ETPs bearing the brunt. At the same time, demand is shifting towards multi-asset and Bitcoin short strategies as traders brace for continued volatility.
Investors withdrew from US funds the most, with the US accounting for 97% (approximately $1.97 billion) of global capital outflows. Switzerland followed closely with redemptions of $39.9 million, followed by Hong Kong with outflows of $12.3 million.
But Germany stood out, with $13.2 million in inflows as German investors took advantage of low prices as a buying opportunity.
Laurent Benayoun, CEO of Acheron Trading, said: decryption ETF flows will largely depend on broader economic data and policy decisions going forward. “The subsequent outflows will depend on a confluence of negative macro factors, including weak employment data, a hawkish Fed stance, and continued price declines,” he said.
Conversely, positive news regarding tariffs, the US regulatory framework for cryptocurrencies, Treasury reserves, and interest rate cuts could lead to “equally positive market sentiment,” leading to “a price reversal rather than the realization of an actual market downturn,” Benayoun added.
Johnny Garcia, head of organic growth at VeChain and former Vanguard staffer, emphasized that ETF flows should not be mistaken for accurate market timing signals. “ETFs have a diverse set of users, and therefore the drivers behind their flows, such as portfolio rebalancing, hedging, rotation, and arbitrage, are similarly diverse,” he said. The depth and liquidity of the ETP market makes it a natural venue for expressing short-term and long-term views alike, he added.
Garcia also cautioned against reading too much into short-term trends. “Opinions about near-term ETF flows are fun, but they border on speculation,” he said. He noted that in the U.S. alone, the three largest spot crypto ETPs have brought in more than $100 billion in less than two years, attracting not only individual investors but also long-term capital allocators such as prop trading firms and university endowments.
