Bitcoin ETFs Suffer Worst Loss Since June as Uptober Turns Red

By Jose Antonio Lanz

Bitcoin ETFs lost $484.9 million in a single day on Wednesday, the worst outflow since June 25, according to Decrypt's ETF tracker. BlackRock's IBIT took the biggest hit at $207.7 million, with Fidelity's FBTC next at $105.1 million.

That one session erased roughly 81% of everything that flowed in over the previous nine, so about two weeks of patient buying went out the door in a day. The funds still sit on $57.8 billion in cumulative net inflows, so while it’s a very bad day for ETFs, it’s not exactly a bank run.

Myriad: How low will Bitcoin go? Click to make your prediction.

The culprit has little to do with crypto itself and is likely much more related to the macro backdrop. The 30-year Treasury yield climbed to about 5.7% on Wednesday, its highest since 2002, while Brent crude settled around $100 a barrel and stocks slid from record highs. Ship attacks around the Strait of Hormuz keep piling up—at least one a day since Oct. 2—and each one is a reason for oil to stay expensive.

What does that mean for Bitcoin investors? Well, expensive oil feeds inflation, inflation keeps the Federal Reserve hawkish, and a hawkish Fed keeps bond yields high. That gets awkward for an asset that pays no interest: why hold Bitcoin through an ETF when a 10-year Treasury yields more than 5% and doesn't lose 6% in a few days? That’s the math institutions and big-money investors do regularly, and those calculations move the market.

Bitcoin ETF flows. Image: Decrypt

The Fed raised rates in September for the first time since 2023, and the minutes from their most-recent meeting released Wednesday show most officials expect another hike before year end. Traders, though, remain skeptical of another hike, an October move looks unlikely based on CME Fedwatch odds and prediction markets. CME currently prices the odds of a Fed hike in October at 19.4% while Myriad gives a hike a 17% chance.

Outside of Wall Street, Bitcoin slid as low as $81,749.83 on Thursday, about 6% below the $86,978 peak it hit earlier this week, and longs in the derivatives market took the brunt of it: roughly $429 million in positions were liquidated over 24 hours, 87.5% of them long bets, according to CoinGlass.

Bitcoin had risen in October six years running until last year, when it fell 3.69%. This year the funds opened October with $321.6 million of inflows over four sessions and are now $163.3 million in the red, with Halloween still 23 days away and plenty of time for things to get spookier.

The Fed meets next on Oct. 27-28 and again on Dec. 8-9, and the September minutes set no date for the next increase.

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