Spot Bitcoin ETFs are seeing their worst stretch of outflows since hitting the market last year, as investors have now yanked out more than $5.5 billion from the 12 major ETFs in just five weeks, making it the longest exit streak since their debut in January 2024, as shown by data from Farside UK.
Clearly, the sell-off started immediately after President Donald Trump returned to the Oval, as he continues to start unnecessary trade wars with China, Mexico, and Canada.
The crypto market isn’t reacting to Trump’s pro-Bitcoin stance. Instead, traders are paying attention to his economic war, which has dragged down risk assets across the board. Greg Magadini, head of derivatives at Amberdata, made it clear: “Bitcoin and crypto overall remain driven by the macro picture right now. I don’t expect Bitcoin to diverge from risk-assets for the time being.”
Bitcoin faces volatility as whales bet against it
Large holders aren’t making things any easier. Over the weekend, an unknown Bitcoin whale opened a $400 million short position, entering at $84,000 with a liquidation price of $86,000. According to QCP Capital, some traders tried to trigger a forced liquidation by pushing the price up just 2.5%, but the position is still open, racking up $400,000 in funding fees.
Meanwhile, fear is creeping into the market. The Crypto Fear & Greed Index has fallen to 32%, signaling a growing sense of caution. Broader markets are also shaky. US equity futures opened lower this morning, with Treasury Secretary Scott Bessent saying a recession “cannot be ruled out.” Investors are also watching US Retail Sales data, looking for signs that consumer spending is slowing after a 0.9% decline in January.
With uncertainty growing, the Federal Reserve isn’t likely to pivot to rate cuts anytime soon. Last week’s softer-than-expected CPI data provided some relief, but with Trump’s tariffs and inflation risks still looming, markets expect the Fed to keep rates steady at this Wednesday’s FOMC meeting. Traders are already bracing for more volatility. On Friday, a large bet on Bitcoin put options—specifically BTC-17MAR25-80k-P—was aggressively bought up, signaling an attempt to hedge against wild price swings.
Bitcoin traders prepare for weak price support below $80K
Bitcoin’s price action in the past couple of months has left a huge supply gap. When Trump won the election in November 2024, the price jumped from $70,000 to $80,000 almost overnight. That means very little Bitcoin changed hands in this range, leaving almost no support in case of a price drop, according to Glassnode’s UTXO Realized Price Distribution (URPD) chart, which shows low historical trading activity between those levels.
If Bitcoin drops below $80,000, traders expecting bargain-hunting at $70,000-$80,000 will be disappointed. The next major support level sits at $73,000, the all-time high from March 2024.
Adding to the pressure, about 20% of Bitcoin’s total supply is now in a loss position, meaning those holdings were purchased at prices above $83,000. These traders could decide to cut their losses, adding more sell pressure below $80,000. 100,000 BTC has been dumped by short-term holders, pushing Bitcoin 30% off its all-time high of $108,000.
There’s some relief in the momentum index, which climbed from 40.9 to 47.6, suggesting selling pressure is easing. But Spot CVD, which tracks accumulation in the market, has dropped to $38.5 million from $54.7 million last week, proving weaker demand, per Glassnode data.
Spot trading volume is also falling. It’s now at $11.5 billion, down from $15.4 billion last week. Lower volume means lower liquidity, making the market more vulnerable to sharp price swings. If this continues, Bitcoin’s price could remain unstable.
Options and futures traders brace for extreme volatility
While spot market activity slows, options and futures traders are getting ready for major price swings. Open interest in Bitcoin options is now at $27.3 billion, showing traders are positioning for volatility. The volatility spread has surged to 0.20, moving past its statistical high band, indicating expectations of big price moves ahead.
More traders are hedging against potential price drops. The 25 Delta Skew has jumped to 0.04, showing increased demand for downside protection. This kind of move usually means traders expect increased volatility or even a market downturn.
Meanwhile, futures open interest is falling, down to $35.7 billion from $37.7 billion last week. That means traders are unwinding leveraged positions, likely due to uncertainty over market direction.
In perpetual futures, CVD has weakened to -569 million, extending its drop from -523 million last week. That means more aggressive selling is hitting the market, with market makers absorbing sell orders instead of buyers stepping in. If this continues, it could signal further downside, as long liquidations increase.
ETF investors aren’t sticking around either. ETF trade volume has dropped to $16.6 billion, down from $20.8 billion last week. The lack of demand and liquidity in spot Bitcoin ETFs suggests broader uncertainty or reduced speculative interest.
Meanwhile, ETF MVRV, a key metric tracking profitability, has slipped to 1.24, down from 1.39 last week. It’s now below the statistical low band, meaning recent ETF buyers are underwater. Historically, when ETF MVRV reaches these levels, it indicates capitulation zones, where selling pressure intensifies unless new buying demand emerges.
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