Bitcoin Outflows: Weak Bearish Conviction Despite $719M Loss

What to Know:

• Bitcoin investment products saw $719 million in outflows amidst a market downturn, reflecting a lack of significant short-bitcoin demand.
• Total outflows across the digital asset market reached $812 million, impacted by changing expectations for US interest rate cuts.
• XRP and Solana experienced inflows, indicating increased investor interest.

In the shadow of a market downturn, Bitcoin has faced significant outflows. However, the absence of an uptick in short-bitcoin demand implies that bearish sentiments may be fleeting.

The broader crypto market experienced a shedding of approximately $812 million. This decrease was propelled by dampened expectations for two US interest rate cuts in 2025, following stronger-than-expected economic indicators like revised GDP and durable goods data. Nevertheless, despite the weekly setback, inflows remain robust.

The latest edition of CoinShares’ Digital Asset Fund Flows Weekly Report reveals that funds’ month-to-date inflows stand at $4 billion. This figure brings the year-to-date total to $39.6 billion, keeping the market on track to challenge 2024’s record inflow of $48.6 billion, assuming momentum persists.

Ethereum, like Bitcoin, has felt the pressure, with $409 million in weekly outflows. This drop-off drastically slowed the previously vigorous inflow momentum. Ethereum’s year-to-date inflows of $12 billion have nearly stalled, with September’s inflows barely scraping $86.2 million.

Simultaneously, multi-asset funds lost $82.5 million over the past week. Chainlink and Litecoin also recorded minor outflows of $0.7 million and $0.2 million, respectively.

Conversely, Solana emerged as the week’s star, attracting a substantial $291 million. XRP followed suit, bringing in $93.1 million, amid the excitement stirred by upcoming US ETF launches. Sui and Cardano posted more modest gains, drawing $2.9 million and $1.3 million, respectively.

Geographically, the United States reported the steepest decline with $1 billion in outflows. In contrast, Switzerland led inflows with $126.8 million, followed closely by Canada and Germany recording $58.6 million and $35.5 million, respectively. Brazil, Hong Kong, and Australia also contributed modest inflows.

Crypto markets are hinting at stabilization following last week’s sharp selloff. Bitcoin and Ethereum reclaimed their positions, holding near levels seen a week ago. Although ETF redemptions were significant, particularly on Friday, spot prices remained steady. This steadiness indicates that quarter-end basis unwinds were the primary driver of outflows, rather than selling pressure.

Volatility is easing and expected to drift lower as markets consolidate ahead of Friday’s US Non-Farm Payrolls report. Meanwhile, potential US government shutdown raises timing concerns. Perpetual futures markets are also showing renewed optimism, with open interest rising to $43.6 billion.

Boosted by Wall Street’s strength, traders are cautiously positioning for a seasonally bullish ‘Uptober.’ However, Bitcoin must still break $115,000 to confirm an uptrend. Options data signals a market regaining confidence, as shown with put skew and open interest in BTC and ETH gradually normalizing as traders rebuild exposure.

Related: Cardano Bull Setup Points to December Rally