$552M Bitcoin & Ethereum ETF Outflows After Fed’s 25bps Cut

Crypto Markets Rattle as Bitcoin and Ethereum ETF Outflows Surge After Fed Rate Cut

The cryptocurrency market was rocked this week after what was expected to be a bullish Federal Reserve announcement instead triggered a wave of fear across digital assets. Following the Fed’s decision to cut interest rates by 25 basis points and confirm the official end of Quantitative Tightening (QT) on December 1, investors braced for a rally. Instead, Bitcoin, Ethereum, and most major tokens plunged, with record-breaking ETF outflows shaking confidence in the digital asset space.

Within 24 hours of the announcement, the crypto market lost nearly 3% of its total value, with more than $830 million in liquidations across major exchanges. Analysts say the sell-off highlights growing anxiety among traders who fear that despite monetary easing, the global risk appetite remains fragile.

Record Bitcoin and Ethereum ETF Outflows Signal Investor Retreat

According to the latest data from SoSo Value, a total of $471 million flowed out of all 12 spot Bitcoin ETFs on October 29 (ET), marking one of the largest single-day outflows in months. None of the institutions recorded inflows, underscoring a complete investor retreat from Bitcoin-linked exchange-traded funds.

Ethereum fared no better. The ETH ETF market saw $81.44 million in outflows during the same period, with only BlackRock’s ETHA registering a modest inflow — an exception that did little to calm broader market fears.

This synchronized sell-off across both Bitcoin and Ethereum ETFs represents a sharp reversal from the optimism seen earlier this month, when inflows had suggested renewed institutional interest. Market analysts say the sudden exodus reflects deepening uncertainty about the Fed’s policy path and its potential impact on risk assets.

“ETF investors are clearly signaling caution,” said Michael Wu, a digital asset strategist based in New York. “While a rate cut is normally bullish for Bitcoin, the Fed’s tone hinted at hesitation, and that spooked traders who were expecting a stronger dovish commitment.”

Massive Liquidations Add to the Chaos

The ripple effect of the ETF outflows was immediate. Data from Coinglass revealed that over 168,000 traders were liquidated within a 24-hour window, with total losses exceeding $831 million. The single largest liquidation occurred on Bybit’s BTCUSD pair — an $11 million position wiped out in seconds.

Bitcoin, often seen as “digital gold,” fell sharply to $108,000 before recovering slightly to trade around $110,029 at press time, representing a 3% daily decline. Ethereum mirrored the drop, falling by roughly 3.2% to hover around $3,889, even as its trading volume rose by 6% — a potential sign of ongoing accumulation amid panic.

Despite the downturn, some analysts view the current correction as a healthy reset rather than a collapse. “These kinds of sharp pullbacks are common during macro policy shifts,” said Grace Tan, a Singapore-based crypto economist. “The market needs to digest the Fed’s message before finding its footing again.”

Why the Fed’s Rate Cut Backfired on Crypto

Traditionally, lower interest rates are bullish for cryptocurrencies. Cheap borrowing costs and improved liquidity tend to drive investors toward riskier assets like Bitcoin and Ethereum. But this week’s announcement didn’t follow the usual playbook.

Federal Reserve Chair Jerome Powell’s press conference hinted at caution rather than confidence. While confirming a 25 basis-point rate cut and the formal end of QT by December 1, Powell stopped short of promising more cuts ahead. His remarks suggested that the Fed might pause to assess the economy’s trajectory before committing to additional easing.

This ambiguity had a chilling effect. “Markets were hoping for Powell to open the door to multiple rate cuts,” said Tan. “Instead, he left that door only slightly ajar — and that uncertainty triggered profit-taking across all risk markets, including crypto.”

The reaction also illustrates the “buy the rumor, sell the news” phenomenon. Traders had already priced in the rate cut weeks earlier, bidding up Bitcoin and Ethereum in anticipation. Once the actual news hit, many investors decided to lock in gains — sparking a cascade of sell orders and ETF withdrawals.

The Liquidity Illusion

One of the biggest misconceptions driving the sell-off, experts say, is the so-called “liquidity illusion.” Even though the Fed is set to inject roughly $1.5 trillion into the financial system as QT ends, that liquidity won’t necessarily reach risk assets like crypto. Instead, much of it may be absorbed by Treasury markets or diverted toward traditional safe havens like gold and silver.

That dynamic was visible in trading activity following the announcement. Gold prices jumped nearly 2%, while silver surged 3% in the same 24-hour period — suggesting that investors are hedging against volatility rather than embracing it.

“Crypto doesn’t move in a vacuum,” said Wu. “When institutions see rising uncertainty, they move capital toward safety. The irony is that a rate cut meant to stimulate growth can actually tighten liquidity in the short term for high-risk assets.”

Bitcoin and Ethereum Price Outlook

Despite the short-term pain, many analysts remain cautiously optimistic about the long-term trajectory of both Bitcoin and Ethereum. Historically, major drawdowns following policy decisions have preceded significant rallies once markets stabilize.

Bitcoin, now trading above $110,000, continues to hold key support levels above $107,000. If macro sentiment improves, analysts believe it could retest the $115,000 to $120,000 range by mid-November. Ethereum, meanwhile, could rebound to the $4,200 mark if daily trading volume sustains its upward momentum.

However, the broader outlook hinges on one critical factor: whether the Federal Reserve will commit to further easing in its December meeting. A clearer policy direction could restore confidence and reverse the recent ETF outflows.

Institutional Investors Still Watching the Fed

The Fed’s policy decisions have become one of the most important variables in crypto price action this year. Institutional investors, who dominate ETF flows, are increasingly sensitive to interest rate expectations. The recent spike in outflows demonstrates that even the promise of liquidity is not enough to counteract macroeconomic caution.

“The market’s reaction isn’t about what the Fed did,” said Wu. “It’s about what the Fed didn’t say — and that’s what’s driving fear right now.”

For Bitcoin and Ethereum, that fear translates into shorter holding periods, higher volatility, and reduced trading depth — all classic symptoms of a cautious, risk-off environment.

Conclusion: A Crossroads for Crypto

The past 48 hours have underscored a critical truth for the digital asset market: monetary policy still wields enormous influence over decentralized finance. While blockchain advocates often emphasize crypto’s independence from traditional finance, the reality remains that global liquidity cycles continue to dictate investor sentiment.

With more than half a billion dollars exiting Bitcoin and Ethereum ETFs in a single day, traders are now waiting for clarity from the Fed and for stability to return. Whether this correction evolves into a prolonged slump or sets the stage for a renewed bull run will likely depend on how global liquidity shifts in the weeks ahead.

Writer @Ellena

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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