Citigroup: For every $1 billion in net outflow from Bitcoin ETFs, the price of Bitcoin falls by approximately 3.4%.
TL;DR
Bitcoin ETFs saw record outflows in November, with Citigroup noting a 3.4% price drop per $1 billion net outflow. Analysts predict continued declines and volatility, driven by hedge fund strategies and market pressures.
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On November 24, Bitcoin exchange-traded funds (ETFs) experienced their worst monthly outflow since their inception in nearly two years, putting further pressure on an already weak crypto market.
Data compiled by Bloomberg shows that investors have withdrawn $3.5 billion from U.S.-listed Bitcoin ETFs so far in November, nearly matching the record monthly outflow of $3.6 billion set in February. BlackRock's Bitcoin fund, IBIT, which accounts for about 60% of the total assets of this type of fund, has already recorded $2.2 billion in redemptions in November, and if there is no large-scale inflow in the coming days, it will mark its worst monthly performance.
Citigroup Research quantified this phenomenon: for every $1 billion (net) outflow from the Bitcoin ETF, the price falls by approximately 3.4%, and vice versa. Based on this, Citigroup analyst Alex Saunders set a pessimistic year-end target of $82,000 (assuming zero inflows). However, the actual outflows have already reached billions of dollars, suggesting further downside potential.
"With the market continuing to decline and volatility increasing, especially given the current trend in gold, capital outflows are likely to continue," noted Rebecca Sin, senior ETF analyst at Bloomberg Intelligence. She also revealed that some of the funds being withdrawn are being used by hedge funds to unwind a popular strategy called "basis trading"—a strategy that profits by capturing the price difference between the spot and futures markets. Some institutions are also using ETFs to profit from cryptocurrency volatility or to hedge short positions in derivatives.