Crypto Funds Endure $3 Billion Exodus Amid Worsening Market Sentiment
Crypto-focused funds have experienced a significant downturn, recording their third consecutive week of substantial outflows. Fresh data from the Kobeissi Letter reveals a staggering $3.2 billion withdrawn over the last three weeks, with a notable $2 billion exiting just last week alone. This marks the most significant capital flight since February, underscoring a troubling trend for digital asset investments.
Bitcoin and Ethereum Lead the Withdrawals
Unsurprisingly, the market's two largest cryptocurrencies bore the brunt of these withdrawals. Bitcoin (BTC) saw a massive $1.4 billion in outflows, while Ethereum (ETH) followed closely behind with $689 million. These substantial exits have pushed the average daily outflows as a percentage of assets under management (AuM) to unprecedented levels, signaling deep-seated market apprehension. Consequently, the cumulative impact of these outflows, coupled with declining prices, has led to a 27% reduction in total AuM, now standing at $191 billion, a situation the Kobeissi Letter describes as a "structural decline."
Expert Outlook and Potential Scenarios
Market sentiment remains largely negative, particularly for Bitcoin. Crypto expert Lark Davis highlights that Bitcoin trading below its 50-week exponential moving average (EMA)—currently just above the $10,000 mark—confirms its position in a bear market. Davis proposes three potential scenarios for the coming weeks: an unlikely drastic descent into a "goblin town" without recovery, a short-term rally testing the 50-week EMA before a sharp downturn, or a more optimistic rebound by year-end, driven by easing macroeconomic conditions like interest rates and market valuations. Further compounding market concerns is the precarious situation of Strategy (formerly MicroStrategy), a major institutional Bitcoin holder led by Michael Saylor. Jacob King, CEO of SwanDesk, warns that if Bitcoin were to fall below Strategy's average buy price of just under $80,000, it could trigger forced liquidations of the firm's significant Bitcoin holdings. This potential cascading effect could push Bitcoin prices down towards $10,000 or even lower due to increased selling pressure. Currently trading at $84,700, Bitcoin remains over 30% below its all-time high of $126,000 reached earlier in October, suggesting the current market turmoil was foreseeable.
