US-based Bitcoin exchange-traded funds (ETFs) on November 5, saw one of the biggest outflow days in their history, with $541 million in a single trading day. The sharp sell-off occurs when the market is experiencing increased volatility about the outcome of the US presidential elections and the Federal Reserve's decisions.
Wise Origin Bitcoin Fund (FBTC) experienced the biggest outflow of $170 million, with ARK Invest's ARKB and Bitwise's BITB trailing behind. Holders seem to be getting cautious and likely to exit or hedge during periods of uncertainty, which is especially crucial at the political and economic points.
The November 5 withdrawals of Bitcoin ETFs represent the second-largest single-day withdrawal rate, behind the one recorded on May 1 earlier this year. The biggest outflow was posted by Fidelity's FBTC, with $170m; ARK Invest's ARKB, with $138m; and Bitwise's BITB, with $80m. Grayscale's Bitcoin Trust also reported notable withdrawals, with $153 million exiting BTC and GBTC funds.
Only BlackRock's iShares Bitcoin Trust (IBIT) reported a positive inflow, securing $38 million. This outlier among Bitcoin ETFs highlights possible investor preference for perceived stability or an indicator of BlackRock's unique market positioning. The divestment across several major funds underscores market caution as investors aim to shield themselves from anticipated volatility connected to the U.S. election and Federal Reserve policy announcements.
The mass withdrawal from Bitcoin ETFs has coincided with a slight dip in Bitcoin's price, falling 0.5% over the past 24 hours to around $68,700. Spot prices over the weekend dropped as low as $67,300, indicating a wider trend of caution as traders adjust positions ahead of key events. Bitcoin's price has fallen nearly 3.21% over the past week, according to CoinMarketCap data, reflecting the broader market apprehension tied to upcoming political and economic developments.
Trading volumes and open interest in Bitcoin reflect mixed sentiments. According to CoinGlass data, trading volume surged by 23.57% to $42 billion, while open interest rose by 1.17% over the past day. This increase in trading activity suggests heightened engagement even as caution prevails, with many investors bracing for the possible impacts of election results and Federal Reserve policy changes on the crypto market.
Cryptocurrencies, particularly BTC, have had a positive market impact after the election period, particularly in the past three elections. Nonetheless, some short-term changes might come forth according to predictions from the U.S. election results. The close race between candidates, particularly pro-crypto candidate Donald Trump, adds another layer of complexity. Investors appear mindful of potential shifts in policy that could influence market dynamics, particularly within the cryptocurrency space.