The wave of cryptocurrency liquidations continues! US Bitcoin ETFs see second highest single-day outflow in history

Affected by the reassessment of Federal Reserve rate cut expectations and the fading rebound of U.S. stocks, the crypto market continues to see liquidations, with significant ETF capital outflows and options traders increasing their bets on volatility. Institutions warn that technical support for bitcoin above $90,000 is weak.

Source: Golden Ten Data

Due to the sweeping risk aversion sentiment in the market, investors have withdrawn nearly $900 million from bitcoin funds, causing the price of bitcoin to further fall below the $100,000 mark.

This largest digital asset plunged as much as 2.8% intraday on Friday, dropping below $96,000 before recovering some losses, but it still remains more than 20% down from the record high set in early October.

According to CoinGecko data, on October 10, the crypto market saw $19 billion in liquidations, causing the total market value of all cryptocurrencies to evaporate by over $1 trillion. Since then, the market has remained under pressure. CoinGlass data shows that the liquidation wave continues, with over $1 billion worth of leveraged crypto bets being closed out in the past 24 hours.

Meanwhile, bitcoin exchange-traded funds (ETFs) recorded a net outflow of about $870 million on Thursday, marking the second-largest single-day redemption since these funds were launched.

U.S. bitcoin ETFs see the second largest single-day capital outflow in history

Earlier this week, U.S. stocks briefly rebounded, driven by the positive news of the government shutdown ending, but the rally quickly faded. With the release of key economic data delayed, traders have begun to question whether the Federal Reserve has grounds for a short-term rate cut—a reassessment that is putting new pressure on higher-risk areas of the market.

"The current sell-off is entirely correlated with other risk assets, but given the higher volatility of cryptocurrencies, their declines are more pronounced," said Max Gokhman, Deputy CIO of Franklin Templeton Investment Solutions. "Until institutions become more deeply involved in the crypto market and investment targets are no longer limited to bitcoin and ethereum, the correlation between crypto and macro risks will remain high."

Market liquidity has also shrunk significantly. Kaiko data shows that market depth—the ability of the market to absorb large trades without significant price swings—has dropped about 30% from this year's highs.

"Since President Trump took office, bitcoin has now turned downward, and the total market capitalization of the entire crypto market has also given back this year's gains. From current levels down to $90,000, (bitcoin) has limited technical support, and market sentiment may remain subdued until further positive news emerges," said Augustine Fan, partner at SignalPlus.

Nick Ruck of LVRG Research said that in the options market, traders are increasingly betting on volatility, with demand for neutral strategies such as straddles and strangles on the rise.