Funding hedging heats up before Christmas holidays, with nearly $300 million net outflow from Bitcoin and Ethereum spot ETFs

During the year-end holiday and the dual impact of tightening liquidity, there was a significant net outflow of funds from US spot Bitcoin and Ethereum ETFs on the eve of Christmas, with market risk aversion sentiment increasing. Data shows that this round of capital withdrawal mainly reflects phased portfolio adjustments and seasonal factors, rather than a fundamental change in institutional outlook on the long-term prospects of cryptocurrencies.

According to SoSoValue data, US spot Bitcoin ETFs experienced approximately $188.6 million in net outflows on Tuesday, marking the fourth consecutive trading day of capital outflows. Among them, BlackRock’s IBIT became the largest outflow product, with a single-day net outflow of up to $157.3 million. Meanwhile, Fidelity’s FBTC, Grayscale’s GBTC, and Bitwise’s BITB also experienced varying degrees of capital outflows. Overall, last week’s net outflow from spot Bitcoin ETFs totaled approximately $49.71 million, contrasting sharply with the nearly $28.7 million net inflow in the previous week.

Ethereum spot ETFs also did not escape unscathed. On Tuesday, they recorded a total net outflow of $95.5 million, after a net inflow on the previous trading day. Grayscale’s ETHE became the product with the most concentrated capital outflow among Ethereum ETFs, with a single-day net outflow of about $50.9 million, setting a recent record for the largest single-day outflow in Ethereum ETFs.

Several institutional sources believe that this round of capital outflows is mainly related to year-end market structure. Kronos Research Chief Investment Officer Vincent Liu pointed out that the outflows from Bitcoin and Ethereum ETFs are more due to year-end liquidity shortages, portfolio rebalancing, and phased profit-taking, rather than a change in investor confidence. Nick Ruck, Research Director at LVRG Research, also stated that seasonal profit-taking before Christmas, tax-loss harvesting, and light trading during holidays are the core reasons for the temporary ETF capital outflows, as investors tend to reduce risk exposure before the holidays.

Presto Research analyst Rick Maeda believes there is no need to over-interpret the current data. He pointed out that over the past few months, the capital flows of Bitcoin ETFs and Ethereum ETFs have been quite volatile, and the de-risking and balance sheet adjustments at year-end are normal after experiencing high volatility in the fourth quarter. Historically, before Christmas 2024, during Bitcoin’s decline from its high point, spot Bitcoin ETFs experienced net outflows exceeding $1.5 billion over four trading days, but the current outflow scale is significantly milder.

Overall, the phenomena of Bitcoin ETF outflows and Ethereum ETF net outflows before Christmas are more like short-term risk aversion and seasonal adjustments, and are not enough to change the overall market outlook on the medium- and long-term trends of cryptocurrencies.