Bitcoin ETFs Record $910M in Two-Week Outflow Streak as Inflation Concerns Persist

US spot Bitcoin exchange-traded funds (ETFs) have shed nearly $910 million over two consecutive weeks, extending a period of investor withdrawals as stubborn inflation and shifting expectations for Federal Reserve policy weigh on cryptocurrency markets.

The funds recorded $228.6 million in net outflows during the week ending October 18, following $681.1 million in withdrawals the previous week, according to SoSoValue data cited by Decrypt. Friday alone accounted for $82.4 million in net outflows, capping a week in which redemptions exceeded new investments on three of five trading days.

The latest withdrawals have pushed Bitcoin ETFs further into negative territory for October. After attracting approximately $293 million at the start of the month, the funds are now down around $615 million for the month, according to Decrypt’s ETF tracker.

Despite the recent weakness, cumulative net inflows since the products launched in January 2024 remain substantial at $57.3 billion.

Inflation Data Triggers Fresh Selling Pressure

Trading was volatile throughout the week. Bitcoin ETFs attracted $175.7 million on Tuesday, but those gains were erased the following day when investors withdrew $261.4 million, marking the largest daily outflow of the week.

A modest $5.1 million inflow on Thursday failed to reverse the trend, with another $82.4 million leaving the funds on Friday.

Wednesday’s sell-off coincided with the release of US inflation data showing consumer prices rose 3.7% year over year in September, above the 3.6% forecast. A stronger-than-expected producer price reading followed on Thursday, reinforcing concerns that inflation could remain elevated and prompting renewed speculation about another Federal Reserve rate hike.

Higher interest rates can make government bonds and other traditional investments more attractive relative to riskier assets such as Bitcoin. They also increase borrowing costs and can support the US dollar, creating tougher conditions for investors who rely on leverage to amplify cryptocurrency positions.

Bitcoin Falls Below $80,000 as Leveraged Positions Unwind

The pressure extended into the broader cryptocurrency market. Bitcoin briefly dropped below $80,000 on Thursday, triggering a sharp round of liquidations among leveraged traders.

CoinGlass data showed nearly $950 million in leveraged crypto positions were liquidated over a 24-hour period, with roughly 90% involving bullish long positions. These forced closures can intensify price declines when traders are required to sell positions to meet margin requirements.

The sell-off also pushed Bitcoin below the estimated average acquisition price of spot ETF investors, which Nexo analyst Iliya Kalchev placed near $82,300 in comments to Decrypt.

A sustained move below investors’ estimated cost basis can add to selling pressure if holders become increasingly concerned about losses. However, the figure is an estimate rather than a uniform entry price across all ETF investors, whose holdings were accumulated at different times and prices.

Bitcoin closed Friday near $81,590, down from approximately $82,337 a week earlier.

Bitcoin ETF Outflows Reach $615 Million in October

The latest withdrawals follow a sharp reversal earlier in the month. On October 7, US spot Bitcoin ETFs recorded $484.9 million in net outflows, their largest single-day withdrawal since June, according to Decrypt.

The weakness has not been confined to Bitcoin products. Ethereum and Solana ETFs have also recorded net outflows during October, pointing to broader caution among investors in crypto-linked exchange-traded products.

Spot Bitcoin ETFs allow investors to gain exposure to Bitcoin through traditional brokerage accounts without directly purchasing or safeguarding the cryptocurrency. Since their launch in January 2024, the funds have become an important channel for institutional investors and financial advisers seeking exposure to digital assets.

That makes daily fund flows a closely watched indicator of investor demand, although outflows do not necessarily mean every institutional investor is reducing overall Bitcoin exposure. Investors may also adjust their positions through direct holdings, derivatives or other financial products.

Long-Term ETF Demand Faces a Short-Term Test

The recent withdrawals represent a setback for Bitcoin ETFs, but they have not erased the substantial inflows accumulated since launch. The funds still hold a significant position in the traditional investment market, even as October’s redemptions signal a deterioration in near-term sentiment.

SoSoValue put the ETFs’ total net assets at $104.29 billion, while Decrypt’s tracker reported approximately $100.2 billion, reflecting a difference between the two sources’ reported figures.

The immediate outlook will depend partly on whether US inflation pressures ease and reduce expectations of further monetary tightening. Persistent price pressures could keep bond yields elevated and weigh on demand for riskier investments, while a more favorable inflation picture could ease some of that pressure.

For now, the nearly $910 million in withdrawals over two weeks underscores the sensitivity of crypto investment products to macroeconomic developments. Bitcoin ETF demand remains significant over the longer term, but the latest figures suggest investors are becoming more cautious as inflation and interest-rate uncertainty return to the forefront.