Bitcoin pullback deepens as US ETFs suffer record daily outflows

On December 20, 2024By Littum

(Bloomberg) — A Bitcoin (BTC-USD) drop from a record high earlier in the week widened to more than 10% as reduced scope for looser U.S. monetary policy dampened speculative fervor.

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The price of the original cryptocurrency fell as low as $95,234 on Friday at 9 a.m. in London after hitting an all-time high just above $108,000 earlier in the week. The downturn weighed more heavily on smaller tokens like Ether and Dogecoin.

A group of U.S. exchange-traded funds investing directly in Bitcoin on Thursday snapped a 15-day streak of continuous inflows to post a record outflow of $680 million, according to data compiled by Bloomberg, underscoring the change in sentiment.

It is “fairly typical” to see such corrections in crypto bull markets, said Strahinja Savic, head of data and analysis at FRNT Financial, while QCP Capital said in a note that the root cause of the sell-off is the market’s “excessively bullish” positioning.

The Federal Reserve’s hawkish pivot on Wednesday weighed on most risk assets. Bitcoin is still up nearly 50% since pro-crypto Donald Trump’s victory in the US presidential election on November 5.

“It appears to be taking a profit at the end of the year,” said Edward Chin of Parataxis. “There was nothing fundamental that triggered the selloff.”

With fewer Fed rate cuts now expected for 2025, some investors may choose to reduce their exposure and take profits.

“Technically, caution is warranted in the near term,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “This doesn’t mean we’re going to see a price drop anytime soon, but momentum has clearly come out of the move and buyers have lost dominance and control over the band.”

—With assistance from Olga Kharif.

(Updates prices.)