Bitcoin ETFs See Outflows As September’s Buying Frenzy Cools - What’s Next for Crypto?

The party's over—for now. Bitcoin ETFs just tipped into negative territory as September's explosive buying spree hits the brakes.

Market Whiplash

Traders are pulling back after last month's frenzy sent shockwaves through traditional finance corridors. The sudden reversal shows even crypto's hottest products aren't immune to profit-taking.

Institutional Cold Feet?

Wall Street's latest crypto darling faces its first real test since the SEC approvals. The outflow pattern suggests big money might be playing the same old buy-the-rumor, sell-the-news game they've run for decades—just with shinier assets this time.

Seasonal Shift or Something Deeper?

September's cooling trend raises questions about sustainable adoption versus speculative fever. The numbers don't lie: when traditional finance gets involved, they bring their bag of tricks—including the classic pump-and-retreat strategy dressed up as 'portfolio rebalancing.'

This volatility serves as a reminder that crypto markets still dance to Wall Street's tune when institutions hold the microphone. The question remains whether this is a healthy correction or the start of a longer cooldown.

Bitcoin Spot ETFs Have Switched To Net Outflows Recently

In a new post on X, on-chain analytics firm Glassnode has discussed about the latest trend in the netflow of the US bitcoin spot ETFs. The spot ETFs refer to investment vehicles that allow investors to gain exposure to an underlying asset without having to own it.

In the context of cryptocurrencies, the spot ETFs allow for an off-chain route into them, which can be preferrable for traditional traders who aren’t familiar with digital asset exchanges and wallets.

These investment vehicles gained approval for Bitcoin from the US Securities and Exchange Commission (SEC) in January 2024. Six months later, ethereum also got its greenlight.

Now, here is the chart shared by Glassnode that shows how the netflow related to BTC’s spot ETFs has changed during the last few months:

As displayed in the above graph, the US Bitcoin spot ETF netflow spiked to significant positive levels earlier in September, indicating that a large amount BTC was flowing into the wallets associated with these funds.

It’s also visible from the chart, however, that demand has witnessed a slowdown recently, with the netflow even turning slightly negative during the last couple of days.

The spot ETFs are the preferred mode of investment for institutional entities, so the netflow associated with them can act as a proxy for the demand among them. Considering the switch to outflows, it WOULD appear that these large investors have paused their accumulation for now.

This change in behavior among institutional traders compared to earlier in the month could in part be why the cryptocurrency’s price has observed a plunge recently.

So far, net outflows have remained limited, but it only remains to be seen how the trend would develop in the coming days. If capital continues to exit these funds, it’s possible that Bitcoin could see a deeper drawdown.

Speaking of the price plummet, analytics firm Santiment has shared in an X post about where social media users think BTC could be headed after it. The indicator cited by Santiment is the “Social Volume,” which measures the total number of posts making unique mentions of a given term or topic.

Below is the chart shared by the analytics firm that shows how the Social Volume related to bearish Bitcoin price targets ($70,000 to $100,000) compares against that of the bullish ones ($130,000 to $160,000).

From the graph, it’s apparent that the social volume related to bearish Bitcoin targets has seen a higher peak than that of the bullish ones following the price plummet. This would suggest social media users are expecting the price drop to deepen.

Bitcoin has historically had a tendency of going against the expectations of the retail crowd, so these bearish calls could actually pave the way to a rebound.

BTC Price

At the time of writing, Bitcoin is trading around $113,300, down 2% over the last seven days.