ETF outflows for several consecutive weeks, with coin prices also falling—has cryptocurrency fallen into a "death spiral"?

🙃 With the New Year approaching, I was ready to go all out, but last week it was the market that went all out instead, as cryptocurrency experienced the toughest correction of the year: Bitcoin plunged from $96,000 to a low of $80,600, a maximum drop of 16%. Ethereum also fell from a high of $3,200 to $2,600, a maximum drop of nearly 20%!

🙃 Echoing the price trend, ETF data is equally chilling: last week, Bitcoin spot ETFs saw a net outflow of $1.22 billion, the third-largest single-week outflow in history and the fourth consecutive week of net outflows. Ethereum's side isn’t looking optimistic either, with a $500 million net outflow last week, marking the third consecutive week of capital outflows.

🙃 Continuous outflows are a direct reflection of waning institutional investor confidence: BlackRock’s IBIT, Fidelity’s FBTC, and Grayscale’s GBTC all saw large-scale redemptions, with IBIT alone experiencing more than $1 billion in outflows in a single week. Ethereum ETFs are facing tough times as well, with $1.3 billion in outflows over eight consecutive days.

🧐 However, fortune and misfortune go hand in hand, and a turning point appeared on the last trading day of last week: Both Bitcoin and Ethereum ETFs saw modest inflows, and both rebounded nicely over the weekend. Crypto market trading volume surged 24% against the trend in 24 hours to reach $1.25 trillion, presenting a complex scene of panic selling intertwined with local bottom-fishing:
💠 On one hand, large-scale ETF redemptions reflect the risk-averse tendencies of traditional financial investors;
💠 On the other hand, on-chain data shows that whales are continuing to accumulate—Bitcoin whales increased their holdings by about 45,000 coins this week, the second largest single-week increase of the year.

🧐 Clearly, around the $80,000 mark, bulls and bears are once again calling each other idiots.

🧐 So, has there ever been a period in history where ETFs saw several consecutive weeks of net outflows?
Actually, during February and March of this year, Bitcoin ETFs saw five straight weeks of net outflows. Bitcoin also pulled back from the $100,000 high at that time, even dropping below $80,000, and market sentiment was no better than it is now.

🧐 And what happened next? After a month of consolidation, Bitcoin quickly surged and went on to hit new all-time highs.

🫡 Now that Bitcoin is once again correcting down towards the $80,000 mark, will it keep dropping? I don’t know—no one knows. But what is certain is that the current price is close to the bottom. Those hoping for Bitcoin to fall back to $50,000 or even $30,000 are just dreaming.

—— Hippo Crypto ETF Weekly Report ( 11/17-11/23 )