Bitcoin bulls are retreating as spot Bitcoin ETF outflows deepen and macroeconomic fears intensify, creating a challenging environment for the leading cryptocurrency. After a promising "Uptober," November has brought a wave of selling pressure, pushing Bitcoin below key support levels and triggering widespread liquidations.
ETF Outflows Accelerate
U.S. spot Bitcoin and Ethereum ETFs have experienced significant combined outflows exceeding $2.6 billion since late October. Bitcoin ETFs alone saw over $1.9 billion in outflows, while Ethereum funds shed $718.9 million during this period. This marks one of the most substantial withdrawal periods since these investment products were launched. On November 5th, US Spot Bitcoin ETFs experienced $137 million in outflows, marking six consecutive days of withdrawals, with BlackRock's IBIT fund accounting for $375.5 million of the total outflow. The intensified outflows have erased optimism surrounding institutional demand, placing significant pressure on the market. However, Ric Edelman, chairman of the Digital Assets Council of Financial Advisors, remains optimistic, emphasizing that the outflows represent only a small fraction (2%) of the over $100 billion in assets accumulated since their debut in January 2024.
Price Decline and Key Support Levels
Bitcoin briefly dipped below $100,000 on Tuesday for the first time since May, although it has since recovered to trade around $102,428. Still, the leading cryptocurrency remains approximately 18% below its October peak of $126,080. The decline triggered over $135 million in liquidations from leveraged bullish BTC futures positions, signaling a significant reduction in bullish momentum. Analysts are closely watching the $100,000 support level, warning of a potential slide toward $92,000 if it breaks. Some analysts believe Bitcoin might need to revisit $92,000 to fill a CME futures gap before resuming its uptrend. If Bitcoin falls another 10%-15%, it could mark one of the deepest mid-cycle corrections since 2018.
Macroeconomic Headwinds
Beyond ETF outflows, broader macroeconomic factors are contributing to the bearish sentiment. Concerns include President Trump's intensifying trade tensions with China, the ongoing government shutdown affecting market liquidity, and reduced expectations for additional Federal Reserve interest rate cuts this year. Investors are also worried that the U.S. government shutdown has already begun to weigh on consumer spending. The potential for energy constraints tied to artificial intelligence (AI) chip production is another factor weighing on the market. The softening institutional demand comes amid a broader risk aversion that has taken hold of global financial markets.
Market Sentiment and Fear
Market sentiment has turned sharply bearish, with the Crypto Fear & Greed Index now indicating "Extreme Fear". This reflects a broader fear of correction as global economies face uncertainty. The decline in BTC mirrored the worsening sentiment in equities, as the Nasdaq index dropped 1.6%, wiping out gains accumulated over the previous two weeks. Demand for put (sell) Bitcoin options has surged, indicating a broader fear of correction as global economies face uncertainty.
Potential Rebound and Future Outlook
Despite the current challenges, some analysts remain optimistic about Bitcoin's long-term prospects. However, renewed bullish momentum is highly dependent on a swift reversal of ETF outflows and a softening of the current macroeconomic headwinds. The market is closely watching if the price stabilizes above $100,000 or drops further toward $92,000.
