TLDR
- Bitcoin faced a major price correction, dropping below $95k after recently surpassing $100k, with ETF outflows reaching $568.8M in a single day
- On-chain metrics show increased sell-side activity and short-term holders selling at losses, indicating market cooling
- The US government received approval to liquidate 69,000 BTC ($6.5B) from Silk Road, adding selling pressure
- ETF activity shows Fidelity’s fund leading outflows at $258.7M, followed by Ark 21Shares and BlackRock
- Ethereum ETFs demonstrated resilience with $35B inflows in 2024 despite recent market volatilit
Bitcoin experienced a notable price decline this week, dropping below $95,000 after recently achieving a milestone of surpassing $100,000. The downturn coincided with several market developments, including heavy ETF outflows and news of potential government Bitcoin sales.
The cryptocurrency market witnessed its second-largest daily ETF outflow, with Bitcoin funds experiencing withdrawals totaling $568.8 million in a single day, according to data from Farside investors. This marked a sharp reversal from the previous three days of steady inflows.
Fidelity’s Wise Origin Bitcoin Fund led the exodus, recording its largest single-day outflow of $258.7 million. This amount represented 45% of the total net outflow across all Bitcoin ETFs. Following closely behind, Ark 21Shares’ ARKB saw withdrawals of $148.3 million, while BlackRock’s IBIT ETF reported outflows of $124 million.
Adding to the market pressure, news emerged about the U.S. government receiving approval to liquidate approximately 69,000 Bitcoin, valued at $6.5 billion, from the seized Silk Road assets. This development came less than two weeks before an anticipated administrative change that had previously indicated intentions not to sell.
The US Govt has been given the greenlight to liquidate 69,000 BTC ($6.5B) from Silk Road, an official confirmed to DB News today
Interesting situation less than 2 weeks away from the new admin who vowed to not sell https://t.co/HqD1KnhJK3 pic.twitter.com/xn8ATSEL7H
— db (@tier10k) January 9, 2025
On-chain metrics revealed increasing sell-side activity in the market. The Taker Buy/Sell Ratio, measured on a 30-day moving average, showed a downward trend following Bitcoin’s March 2024 price surge and recent all-time high. Historically, this pattern has preceded periods of price decline.
Short-term investor behavior also reflected market cooling, with the Short-Term Spent Output Profit Ratio (SOPR) falling below 1. This metric indicates that many short-term holders are currently selling at a loss, a pattern commonly observed during correction phases.
The Crypto Fear & Greed Index, a key sentiment indicator, shifted from “Extreme Greed” to “Greed” over the past month. The index score decreased from 78 to 69, suggesting a moderation in market optimism amid recent price fluctuations.
Market analysts have pointed to various factors contributing to the current price movement. Ryan Lee, Chief Analyst at Bitget Research, attributed Bitcoin’s dip primarily to strong U.S. economic data suggesting potential interest rate hikes.
Trading expert Daan Crypto Trades noted the choppy nature of early-year market activity, cautioning against drawing definitive conclusions from current price patterns. This perspective aligns with historical observations of increased market volatility during the year’s opening weeks.
$BTC Last year, the market often bottomed (or topped) in the first week of the month.
This was then followed by a large move to the other direction.
Generally, we saw a sharp decline during the first few days of the month and a bounce after.
June was the only month where price… https://t.co/92aFXAlUiY pic.twitter.com/m7gg1zW6Pd
— Daan Crypto Trades (@DaanCrypto) January 8, 2025
In the broader ETF landscape, Ethereum funds have shown resilience despite recent market turbulence. These funds accumulated $35 billion in inflows throughout 2024, even while experiencing recent outflows of $159.4 million.
The funding rates, measured on a 30-day moving average, have trended downward. Negative funding rates typically indicate bearish market sentiment among leveraged traders, though they can also set the stage for future recovery once market sentiment stabilizes.
Current market data shows Bitcoin trading at $92,317, representing a 3.3% decrease over the past 24 hours. This price movement occurred against the backdrop of broader market adjustments and changing investor sentiment.
Several Bitcoin ETFs reported minimal or no activity during this period, highlighting the uneven distribution of outflows across different fund providers. This disparity suggests varying levels of investor confidence and strategy among ETF holders.
The timing of potential government Bitcoin sales has attracted particular attention from market participants. The approved liquidation of Silk Road-seized Bitcoin represents a major supply-side factor that could influence market dynamics in the coming weeks.
Examination of market depth data reveals varying levels of support and resistance at different price points. Trading volumes have fluctuated in response to price movements, with increased activity during periods of sharper price changes.
Recent market activities have prompted discussions about Bitcoin’s short-term price trajectory. However, traders and analysts emphasize the importance of distinguishing between temporary market adjustments and longer-term trends.
