The plunge triggered a "vicious cycle": BlackRock's Bitcoin ETF set a record for daily fund outflows

The iShares Bitcoin Trust (IBIT) under the world's largest asset management company BlackRock has encountered the most severe capital outflow since its establishment. As of Tuesday, November 18, the fund experienced a net outflow of $523 million in a single day, setting a historical record, marking the fifth consecutive trading day of capital withdrawal for IBIT.

The ongoing capital outflow has exacerbated the decline in Bitcoin, with the largest cryptocurrency falling below the psychological threshold of $90,000 again on Wednesday, down over 20% from a month ago, reaching a seven-month low. Meanwhile, the total market capitalization of the cryptocurrency market has dropped to $3.04 trillion, evaporating $1 trillion from its peak market value.

Specific data shows that IBIT just set a record outflow of $463 million last Friday, and the $523 million outflow on Tuesday has once again refreshed this figure, indicating that the capital withdrawal is accelerating. IBIT is currently the largest Bitcoin spot exchange-traded fund in the world, highly sought after by investors since its launch in January 2024, with assets exceeding $72 billion and inflows of nearly $26 billion this year.

Not only IBIT, but the entire Bitcoin ETF ecosystem has recently faced pressure. Fidelity's Wise Origin Bitcoin Fund (FBTC) and Grayscale Bitcoin Trust (GBTC) have seen outflows of $266 million and $146 million, respectively, over the past five trading days.

Since November, 12 U.S. spot Bitcoin ETFs have cumulatively seen outflows of over $3 billion, with IBIT alone withdrawing nearly $2 billion.

Chain Reaction

The capital outflow from Bitcoin ETFs and the price decline have formed a vicious cycle.

Media reports quote Pepperstone research strategist Dilin Wu as saying, "The outflow of ETF funds combined with the selling by long-term holders has led to tightened market liquidity, pushing down the short-term price of Bitcoin and highlighting the weakening market confidence."

The liquidity situation in the market has continued to deteriorate due to the recent U.S. government shutdown and the uncertainty surrounding the Federal Reserve's December interest rate decision. Traders are divided on whether the Federal Reserve will cut rates by another 25 basis points, which has intensified market volatility.

Ethereum ETFs have also not been spared from this wave of withdrawals. BlackRock's ETHA product saw an outflow of $165 million in a single day, while competing products only saw a small inflow of funds.

In stark contrast, the emerging Solana ETF has performed impressively. The Bitwise Solana Staking ETF (BSOL) has achieved net inflows every trading day since its listing less than three weeks ago, currently managing assets of $611 million.

On Wednesday, the 21Shares Solana ETF (TSOL) became the fifth Solana tracking fund listed on U.S. exchanges, further expanding this emerging product category As for when this wave of selling will end, analysts are cautious. K33 Research Director Vetle Lunde warned that the Bitcoin derivatives market is forming a "dangerous" pattern.

The open interest in perpetual futures increased by more than 36,000 Bitcoin in one week, marking the largest weekly increase since April 2023. Meanwhile, the funding rate has surged, indicating that traders are frantically "catching falling knives" rather than taking defensive positions.

Lunde stated, "The current market structure resembles patterns that typically lead to further declines." He estimates that the bottom could be between $84,000 and $86,000, and if the sell-off accelerates, it could even drop towards the April low of $74,500.

Institutions are still actively positioning

Despite the current weak market performance, some traditional "long money" is still positioning itself.

Harvard University's endowment fund recently disclosed that as of the third quarter of 2025, it has increased its position in the IBIT from 1.9 million shares to 6.8 million shares, a significant increase of 257% compared to the previous quarter, valued at approximately $442 million. This holding accounts for 20.97% of its reported total holdings in U.S. listed stocks, making it the largest holding in Harvard's endowment fund.

Additionally, the Abu Dhabi Investment Authority (ADIC) also doubled its Bitcoin ETF holdings in the third quarter. Regulatory filings show that as of the end of September, the agency increased its holdings in the BlackRock IBIT fund to nearly 8 million shares, valued at approximately $518 million at that time.

The movements of sovereign wealth funds contrast with the outflows from ETFs, revealing strategic divergences among market participants.

As a pioneer, BlackRock is actively positioning itself in the Ethereum ecosystem, having submitted a name registration application for the iShares Staked Ethereum Trust ETF in Delaware, marking the first public signal of a new ETF product in preparation.

Meanwhile, the U.S. market is set to welcome more cryptocurrency ETF products. Bitwise Asset Management's XRP ETF is expected to begin trading on Thursday, while Grayscale and Franklin Templeton's funds tracking the fourth-largest cryptocurrency may also list in the coming days.

Risk Warning and Disclaimer

The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk