Bitcoin ETF Outflows Hit $1.2B Even as Wall Street Deepens Its Crypto Bets
Bitcoin exchange-traded funds (ETFs) just witnessed their third-largest weekly outflow on record, with over $1.2 billion exiting spot Bitcoin funds last week. This massive withdrawal was accompanied by $508 million from Ethereum products, while Solana ETFs attracted $137 million in new investments, according to data from SoSoValue.
Market Recovery Defies Outflow Trends
Despite these significant outflows, Bitcoin rebounded 4.4% in 24 hours to $106,172, while Ethereum gained 7.2% to $3,617. This recovery helped trim recent losses that stemmed from U.S. government shutdown concerns and broader macroeconomic uncertainties.
Market analysts suggest the price drawdown reflects position-trimming after one of the strongest inflow streaks since early 2024, rather than outright capitulation. The market appears to be undergoing a natural correction rather than a fundamental shift in sentiment.
Improving Financial Conditions Support Risk Assets
Recent liquidity indicators show tightening SOFR-EFFR spreads from their late-October highs, signaling easing financial conditions. The dollar index's rally has stalled, and borrowing from the Federal Reserve's standing repo facility has dropped to zero. These factors collectively support renewed risk-taking in financial markets.
Wall Street Takes Over from Degens
Wall Street's interest in crypto remains intense despite the ETF outflows. BlackRock's Bitcoin ETF continues to lead inflows for the year, while Fidelity and VanEck have expanded their spot product lines. However, most institutional participation still occurs off-chain rather than through direct blockchain interactions.
As Annabelle Huang of Altius Labs noted in a recent CoinDesk op-ed, crypto's largest investors continue to buy exposure through ETFs rather than directly on-chain. This preference stems from concerns that current infrastructure doesn't meet Wall Street standards of reliability, keeping the market's liquidity and transparency potential only partially realized.
The Professionalization of Crypto Markets
Market maker Enflux highlighted that this shift reflects a broader evolution in crypto itself, as speculative trading gives way to professional infrastructure and mainstream financial integration.
"When the Fed injects, Bitcoin rallies; when yields twitch, it falls," the firm observed. "The dream of decoupling is gone for now, and what's left of the market will either professionalize or disappear."
The current environment suggests institutions are trimming risk rather than abandoning crypto entirely, with trading activity increasingly moving to more traditional financial channels while maintaining exposure to digital assets.
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