Bitcoin, Ethereum Funds See $1B in Outflows as Bullish Sentiment Fades

The sell-off came as the crypto market crashed earlier today. The BTC price fell below $85,000 and then fell to $81,000. The market recovered to $83,000 in the early morning hours of Friday. ETH also dipped by 6% in a day.

Notably, other spot crypto ETF funds saw outflows as well. The XRP ETFs recorded a substantial outflow of funds worth $92.92 million. On the other hand, the Solana funds did not see as high an outflow from institutional investors as $2.22 million.

The recent sale of Bitcoin and Ethereum ETFs shows that institutional investors are withdrawing from their broad investments in cryptocurrencies and not just rotating between different assets.

The largest loser was BlackRock‘s IBIT with an outflow of $317.8 million, while Fidelity’s fund, FBTC, lost $168 million. BlackRock‘s fund, ETHA, which tracks Ethereum ETFs, lost $54.9 million. Also, Fidelity’s FETH had an outflow of $59.2 million. This is different from early January, when there were consistent inflows into crypto ETFs.

Arthur Hayes Ties Bitcoin Price Dip to US Treasury Liquidity Drain

The BitMEX CEO Arthur Hayes said that the decline in the price of Bitcoin is due to a decrease in the amount of liquidity in US dollars. According to him, this is being driven by cash reserves, specifically those being held by governments.

Hayes noted that about $300 billion in dollar liquidity has been removed from the markets in recent weeks. The major contributor was an increase of $200 billion in the US Treasury General Account (TGA), the governments cash reserves held at the Federal Reserve.

He even went to the extent of suggesting that the Treasury may be holding cash reserves, awaiting a possible government shutdown in the U.S. This would ensure that the government has a spending budget in case negotiations fail. The founder had initially projected that the Bitcoin bull run would occur despite the crypto ETFs outflows.

He projected a rally would commence this year if the Fed intervenes in the crashing Japanese yen. However, the market has only gotten worse since the projection.