Bitcoin's bear market deepens as ETF investors yank $870 million

Bitcoin

Bitcoin fell further below the $100,000 mark as a bout of risk aversion sweeping across markets saw investors pull nearly $900 million from funds investing in the token.

The largest digital-asset sank as much as 2.8% to below $96,000 on Friday before paring losses, leaving it more than 20% below a record high reached in early October.

The crypto market remains under strain after $19 billion in liquidations on Oct. 10 in turn erased over $1 trillion from the total market value of all cryptocurrencies, CoinGecko data shows. The liquidations keep coming, with more than $1 billion worth of leveraged crypto bets wiped out in the past 24 hours, according to CoinGlass data.

Meanwhile, exchange-traded funds investing in Bitcoin saw net outflows of about $870 million on Thursday, the second-largest daily withdrawal since their debut.

A brief rebound in US equities earlier this week, driven by relief over the end of the government shutdown, quickly faded. With key economic data releases delayed, traders are questioning whether the Federal Reserve can justify near-term rate cuts — a reassessment that’s putting fresh pressure on riskier corners of the market.

“The current selloff is fully correlated with other risk assets, but the magnitude in crypto is larger given its higher volatility,” said Max Gokhman, deputy CIO at Franklin Templeton Investment Solutions. “Crypto’s beta to macro risks will stay high until deeper institutional participation broadens beyond Bitcoin and Ether.”

Liquidity has also thinned sharply. Market depth — the market’s capacity to absorb large trades without suffering big price swings — has fallen roughly 30% from this year’s high, according to Kaiko.

“With Bitcoin now having turned negative since President Trump’s inauguration, and the overall crypto market cap having round-tripped year-to-date, there is not much technical support from here to the low $90,000, with sentiment likely to stay depressed until further notice,” said Augustine Fan, partner at SignalPlus.

In the options market, traders are increasingly positioning for volatility, with demand rising for neutral strategies such as strangles and straddles, according to Nick Ruck at LVRG Research.