Bitcoin ETF experiences a $358 million outflow in a single day! Is this institutional withdrawal or a rebalancing signal?

At the beginning of this week, spot Bitcoin ETF recorded a net outflow of $358 million, marking the largest single-day fund outflow in over three weeks, with Bitcoin price down 31% from the all-time high of $126,219. This Bitcoin ETF outflow has sparked market speculation that institutional investors may be reducing their holdings. However, volatility indicators and correlation data suggest that institutional funds have not truly abandoned Bitcoin ETFs but are waiting for clearer market signals.

Bitcoin ETF Outflows Do Not Signal a Trend Reversal

(Source: Coinglass)

On December 17, Bitcoin price rebounded to around $87,500 after initially dropping to $85,000 earlier in the week. The increased outflow from spot Bitcoin ETFs seems to indicate that institutional demand has weakened since the crash on October 10. This reduces the likelihood of Bitcoin surpassing $100,000 before the end of the year. However, does a single-day outflow of $358 million from Bitcoin ETFs truly mean institutional investors are selling off?

Analyst “forcethehabit” states that Bitcoin’s decline does not signify a trend reversal, as rate hike plans have been delayed and the Federal Reserve’s balance sheet reduction has lasted longer than expected. The analysis points out that institutional capital mainly enters the market through Bitcoin ETFs and corporate reserves, and a shift toward riskier, less liquid assets has not yet occurred. This suggests that the short-term outflows from Bitcoin ETFs may simply be normal position adjustments rather than strategic withdrawals.

Judging that institutional funds have already abandoned Bitcoin ETFs based solely on the past ten weeks of corrections seems premature, especially considering that over the past 18 months, Bitcoin has outperformed the S&P 500 by 7%. While this margin may seem small, the risk profile of Bitcoin ETFs is very similar to that of Nvidia and Broadcom, which are among the top eight companies by market cap globally.

Historically, Bitcoin ETF fund flows tend to be volatile. When Bitcoin ETFs were first launched in early 2024, single-day inflows once exceeded $1 billion, but there have also been several hundred million dollars in outflows. The key is to observe whether outflows persist and whether they are accompanied by on-chain data and derivatives market shifts. Currently, Bitcoin ETF outflows appear more like profit-taking and short-term repositioning rather than a trend of abandonment.

The Complex Relationship Between Bitcoin and Gold

(Blue represents Bitcoin, red represents Gold, Source: Trading View)

The correlation between Bitcoin and gold prices can be used to assess whether Bitcoin ETFs are viewed as a store of value alternative or merely a substitute for high-risk assets. The concept of digital gold has been a significant factor driving Bitcoin ETF growth into 2025.

Since May, the 60-day correlation indicator has fluctuated around positive and negative, indicating a lack of consistent movement between Bitcoin ETFs and gold prices. Although Bitcoin traders are disappointed by the retreat after breaking below $110,000, the 31% decline in Bitcoin ETF prices since October has not affected the correlation indicator. This weakens the argument that institutional risk perception has shifted.

Even though gold remains the world’s largest store of value, with an estimated market cap of $30 trillion, Bitcoin ETFs, as an independent and decentralized financial system, still have the potential to succeed. More importantly, Bitcoin ETF price movements have not followed gold, indicating that investor positioning for Bitcoin ETFs is still evolving.

Key Signals from Volatility Indicators

(Source: Laevitas)

Implied Volatility Stable: The implied volatility of Bitcoin ETF options peaked at 53% in November, roughly comparable to Tesla’s current level, indicating market expectations have not worsened.

Market Maker Risk Exposure: Market makers tend to reduce risk exposure when large price swings are likely, but this does not necessarily mean investors have turned bearish on Bitcoin ETFs.

Relative Valuation Attractiveness: The risk-adjusted returns of Bitcoin ETFs are comparable to large tech stocks, maintaining appeal for institutional investors.

When traders expect significant volatility in Bitcoin ETF prices, this indicator rises, reflecting higher premiums on call options (buy) and put options (sell). However, current volatility levels do not show extreme panic or optimism, contrasting with the $358 million single-day outflow.

Is the $100,000 Target Still Valid?

There is no evidence that institutional investors have abandoned the expectation of Bitcoin reaching $100,000 in the short term. Correlation and volatility indicators suggest that after a 30% decline, Bitcoin ETF prices have not fundamentally changed, so it is premature to overstate the significance of a few days of net outflows.

The recent liquidity injections by the Federal Reserve have not yet manifested in the Bitcoin ETF market, so it is too early to judge Bitcoin ETF performance. Institutional interest remains, waiting for more favorable entry points. Once macro conditions improve or new catalysts emerge, Bitcoin ETF inflows could quickly resume.

Furthermore, the long-term rationale for Bitcoin ETFs remains intact. Companies continue to increase Bitcoin holdings, regulatory clarity is improving, and institutional demand for allocation is growing, providing structural support. The $358 million single-day outflow may simply be a normal correction in the bull market phase.