U.S. spot Bitcoin ETFs, including BlackRock and Fidelity, experienced significant outflows, peaking on December 24 with a single-day $175.3 million withdrawal amid holiday market shifts.
This trend contributes to market volatility and underscores tax-loss harvesting practices, potentially affecting Bitcoin and Ether prices as year-end pressures temporarily retract liquidity.
BlackRock and Grayscale Face Major Bitcoin ETF Outflows
Spot Bitcoin ETFs recorded significant outflows, with major players like BlackRock and Grayscale experiencing notable impacts. The flows turned negative, altering the demand dynamics in the market.
BlackRock’s IBIT saw a significant exodus, while Grayscale’s Ether ETF experienced large outflows. The shifts reflect a pivotal change in market behavior as spot ETFs witness declining flows.
Institutional Participation Declines Amid Tax-Loss Harvesting
The net outflows have led to a decrease in institutional participation, primarily due to tax-loss harvesting strategies. The situation remains dynamic with potential short-term market impacts anticipated.
Insightful analysis suggests that these outflows could result in continued price stabilization phases. Historical patterns indicate that after flows neutralize, positive inflows might be observed. According to BitBull, a trader, “Price stabilizes first, flows turn neutral, and only then do inflows return.”
The regulatory landscape remains unaffected by these changes.
Seasonal Outflows Indicate Possible Price Stabilization
Similar seasonal outflows were previously noted, primarily linked to tax-loss harvesting and options expiry. Historically, outflows have been followed by a return to neutral and positive flows.
Experts from Kanalcoin suggest that while current outflows challenge market sentiment, past trends indicate possible price stabilization followed by renewed inflows. The context provides a framework for understanding potential market movements.
| Disclaimer: This website provides information only and is not financial advice. Cryptocurrency investments are risky. We do not guarantee accuracy and are not liable for losses. Conduct your own research before investing. |
