According to Woofun AI, the cryptocurrency market continues to decline, with spot Bitcoin ETFs and spot Ethereum ETFs in the U.S. market experiencing their most severe capital outflows in months.
Data from SoSoValue indicates that this phenomenon marks a sharp escalation in institutional investors' risk-averse sentiment toward mainstream crypto assets, with market liquidity rapidly contracting. On October 7, 12 listed Bitcoin ETFs in the U.S. market collectively shed $484.9 million, the largest single-day outflow since June 25.
BlackRock (BLK.US)'s iShares Bitcoin Trust (IBIT.US) recorded the largest outflow at $207.7 million, followed by Fidelity (FBTC.US)'s FBTC with $105.1 million in outflows, while ARK 21Shares (ARKB.US)'s ARKB saw $101.7 million exit.
Meanwhile, Ethereum ETFs also experienced $160.9 million in outflows, bringing the total losses over these five trading sessions to $506.3 million, the highest level since January of this year. BlackRock (BLK.US)'s ETHA (ETHA.US) accounted for $116.1 million of Wednesday's redemption activity, while Grayscale's ETHE (ETHE.US) lost $25.8 million.
These funds have now seen capital outflows for seven consecutive trading days, with cumulative outflows amounting to approximately $569 million. On Wednesday alone, these two categories of ETFs collectively lost about $646 million — at a time when Bitcoin's closing price fell to its lowest level in the past 20 days, dropping below $83,000, while Ethereum's price retreated to around $2,500.
Notably, this price action coincided with rising U.S. Treasury bond yields, a strengthening dollar, and rising oil prices, further intensifying pressure on risk assets. Signs of outflows had actually emerged earlier, with Bitfinex analysts noting weakening institutional demand before Wednesday's market decline.
In an October 7 report, these analysts pointed out that Bitcoin ETF capital flows have become increasingly unstable, with investment momentum slowing sharply after the buying spree that drove prices higher in September. During mid-September when Bitcoin's price rose from $76,000 to $87,000, daily net inflows averaged $341.7 million. However, in the five trading days before October 6, this figure dropped to approximately $35 million per day, with cumulative net inflows over five days reaching only $172.9 million.
Data compiled by Woofun AI shows that remaining demand is also highly concentrated in BlackRock (BLK.US)'s IBIT (IBIT.US), which attracted $536.2 million in inflows over these five days, while other competing Bitcoin ETFs collectively lost $363.3 million. This disparity has made the market increasingly reliant on a single fund to offset redemption pressure elsewhere, and when IBIT also joined the selling on Wednesday, this supporting force diminished accordingly.
The reason for this reversal is that Bitcoin's current price has fallen below the average holding cost of ETF investors. Bitfinex calculated a flow-weighted average ETF cost of $84,318. Analysts observed that typically when Bitcoin's price approaches investors' overall break-even point, daily net inflows drop to around $65 million.
Bitcoin's closing price falling below $83,000 on Wednesday means its price has dropped below this threshold, increasing the possibility that further declines could trigger more investors to redeem assets to control losses. Although this figure does not reflect individual investors' purchase prices, it can reflect the profitability of capital invested through these ETFs.
On the Ethereum side, signs of weakening demand are also emerging. In addition to continued ETF outflows, CryptoSlate previously reported that short demand is increasing in the derivatives market, with traders holding short positions paying fees to long holders through negative perpetual contract funding rates. This positioning indicates that bearish traders are increasingly willing to bear costs to maintain their positions while waiting for further price declines, which also intensifies the redemption pressure facing Ethereum ETFs.
Bitfinex also warned that reduced institutional capital inflows are making the entire altcoin market increasingly dependent on capital rotation between existing cryptocurrency positions. If Bitcoin's downward momentum accelerates, investors attempting to reduce risk may withdraw funds from altcoins rather than rotating capital into other digital assets, which would leave smaller tokens facing greater risk.
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