On Wednesday, U.S. spot Bitcoin exchange-traded funds (ETFs) saw a giant swing, with $470.7 million in net outflows. This quickly ended a four-day run of net inflows. The significant shift in monetary policy co-occurred with the most recent decline in U.S. Federal Reserve interest rates. 

Additionally, the comments from former President Donald Trump altered the market’s perception of U.S. trade policies. Investors seemed eager to lock in profits and rebalance their portfolios ahead of a closely watched speech by Fed Chair Jerome Powell, which added another layer of caution to the already volatile crypto market.

SoSovalue’s 12 Bitcoin ETFs all declined simultaneously, particularly after accumulating a total of $462.7 million in inflows over the previous four days. Fidelity’s FBTC and ARK 21Shares’ ARKB led the exodus, recording outflows of $164.36 million and $143.8 million, respectively.

BlackRock’s IBIT and Grayscale’s GBTC, on the other hand, lost $88 million and $65 million, respectively. No spot ETF products drew in any money on that day.

The Crypto Market Maintains Its Volatility

The day’s trading volume jumped to $7.07 billion from $4.18 billion in the previous session. This suggests that there was increased market activity following the Fed’s rate decision and a significant political discussion.

Although everyone expected the Federal Reserve to lower rates by 25 basis points, the values of Bitcoin (BTC) and Ethereum (ETH) fell by approximately 3% in 24 hours, as traders decided to “sell the news.”

Fed Chair Jerome Powell didn’t give investors any reassurance when he said that further rate reductions are still uncertain. He stressed that additional cuts would depend on the economy’s performance, saying, “It is not a foregone conclusion that the policy rate will be cut again at the December meeting.” Not at all; policy is not on a predetermined path.

At the same time, the broader cryptocurrency market experienced a surge in liquidations. CoinGlass’s data showed that overall crypto liquidations rose 75% to $594 million, which wiped out more than 146,000 dealers. Bitcoin and Ethereum lost the most money.

The Long-Term Outlook is Still Positive

Despite the significant short-term volatility, some analysts remain optimistic about the future of Bitcoin and other digital assets. Andrew Forson from DeFi Technologies believes that strong corporate earnings make people more willing to take risks. Matt Mena from 21Shares thinks that Bitcoin will reach new all-time highs before the end of the year. 

Mena says that sound policies, a significant amount of money in the market, and a better mood might all help Bitcoin break through its $124,000 high and conclude the year in the $130,000–$150,000 region, while Ethereum aims for $5,000–$6,000.

Recent ETF outflows indicate that investors are reevaluating their positions and exercising caution, but the overall market could still be a favorable environment for bullish momentum to return in the coming months.