• BlackRock’s Bitcoin ETF sees a record $523M outflow amid weakening market sentiment.
• Bitcoin drops 30% from October peak as liquidations and volatility shake investors.
• Global crypto products face $2B weekly outflows, signaling broad institutional pullback.

BlackRock faced renewed pressure on Tuesday as its iShares Bitcoin Trust recorded its largest single-day outflow since its launch. Investors pulled $523 million from the fund, marking the fifth straight day of withdrawals, according to SoSoValue data. The outflow occurred as price volatility increased and market confidence weakened further.

Bitcoin is now down almost 30% from its all-time high in October. The token has fallen to its lowest level since April and prolonged the harm of the liquidation event of October 10. That incident wiped out about $19 billion in leveraged positions and market structure. Traders continue to grapple with the shock, limiting their overall risk appetite.

The fall sent all dozen US spot Bitcoin exchange-traded funds into the red on Tuesday. These product holders are now suffering losses, and the slowdown has increased sector redemptions. 

In the first month of this year, the group experienced withdrawals of over $3 billion. Almost $2 billion of those outflows were through BlackRock’s fund. BlackRock did not respond to a comment request.

BlackRock’s Dominance Weakens as Investor Confidence Fades

The change is drastic, as the ETF of BlackRock has been a market leader since its launch in January 2024. The fund has accumulated over $72 billion in assets, and it has brought approximately $26 billion in inflows this year. 

It was soon to be the biggest Bitcoin ETF in the United States. However, in the recent flow, institutional interest appears to be becoming cooler due to an accumulation of uncertainty.

Source: X

Analysts indicate that liquidity is becoming tight as a result of the ETF redemption and selling through long-term holders. Dilin Wu, a strategist at Pepperstone, said that these aspects have burdened short-term prices and revealed a declining confidence. Players in the market are waiting to see some signs of market stabilization, but the existing circumstances do not give any encouragement.

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The options traders are also moving into defensive positions. Sean Dawson of Derive.xyz has said that there has been a growth in the demand for downside protection. According to him, there are a lot of traders hedging the risk of Bitcoin falling to around $80,000 by the end of December. The weak US job market and low propensities of a December rate cut have added to the sober mood.

Global Redemptions Surge as Digital-Asset Prices Continue to Fall

Last week, international digital-asset investment products experienced significant pressure. The outflows amounted to $2 billion, the highest since February, marking the third consecutive week of withdrawals. As of now, accumulated redemptions are to the tune of $3.2 billion. The crash was closely preceded by sharp drops in prices of the largest cryptocurrencies.

The amount of assets digital-asset ETFs are managing has decreased since their peak at the beginning of October, from $264 billion to $191 billion. Analysts have mentioned policy uncertainty and aggressive selling of large crypto-native wallets as contributing factors. 

The US contributed the largest part of this past week’s outflows at $1.97 billion, and Switzerland and Hong Kong followed with $39.9 million and $12.3 million, respectively.

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