Bitcoin’s $2.9B ETF Outflows: Is the Market Bracing for a Bigger Crash?


 

Bitcoin Faces Heavy ETF Outflows as Traders Brace for More Downside

Bitcoin’s recent downturn has rattled investors, with heavy exchange-traded fund (ETF) outflows and massive liquidations signaling that the market is purging highly leveraged buyers. The cryptocurrency, which briefly retested $79,500 earlier this week, slid below $73,000 on Wednesday, mirroring weakness in the tech-heavy Nasdaq Composite.

ETF Outflows and Liquidations

U.S.-listed Bitcoin spot ETFs have recorded over $2.9 billion in outflows across 12 trading days, averaging $243 million daily since January 16. This coincides with Bitcoin’s rejection at $98,000 on January 14, which triggered a 26% correction over three weeks. Leveraged long positions exceeding 4x have already been wiped out, with $3.25 billion in liquidations hitting futures traders.

Lingering Impact of Binance’s October Crash

Some analysts point to the lingering effects of the $19 billion liquidation on October 10, 2025, caused by a technical glitch at Binance. The incident disrupted transfers and data feeds, forcing the exchange to compensate users with $283 million. According to Dragonfly’s Haseeb Qureshi, the crash exposed weaknesses in crypto liquidation mechanisms, which lack the circuit breakers common in traditional finance. Market makers are still recovering, reducing liquidity and amplifying volatility.

Options Market Signals Bearish Sentiment

Options data reinforces the bearish outlook. The BTC 30-day 25% delta skew surged to 13%, well above the neutral 6% threshold, showing strong demand for downside protection. Professional traders remain unconvinced that Bitcoin has found a bottom at $72,100, especially as tech sector concerns—such as AMD and Google’s push into proprietary AI chips—add pressure to risk assets.

Rumors and Market Confidence

Two speculative narratives have further unsettled investors:

  • A rumored $9 billion Bitcoin sale linked to quantum computing risks, which Galaxy Digital has denied.

  • Concerns over Binance’s solvency, following temporary withdrawal halts. On-chain data, however, suggests deposits remain stable.

Outlook

Bitcoin’s price action increasingly resembles that of a high-beta tech stock, moving in tandem with Nasdaq sell-offs. Persistent ETF outflows remain the most critical pressure point. While crypto markets historically recover from crises, the timing depends on liquidity returning and macroeconomic conditions stabilizing.

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