Balchunas Challenges the Narrative: Are BTC ETF Outflows Really Driving the Price Drop?

Analyst Eric Balchunas throws a wrench into the market's favorite story. The direct link between Bitcoin ETF outflows and the recent price slump? He's not buying it.

The Flawed Correlation

Market chatter has been dominated by a simple equation: money leaves the ETFs, price goes down. Balchunas cuts through that noise, suggesting traders are conflating correlation with causation. The real price drivers, he implies, are far more complex—a concept that often escapes the spreadsheet jockeys on Wall Street who think every market move needs a tidy, single-cell explanation.

Looking Beyond the Headline Flows

This isn't about denying outflows exist. It's about questioning their assumed power. Other forces—macro fears, leverage unwinds, or plain old profit-taking—could be pulling the strings. The ETF flow data provides an easy scapegoat, but the true narrative might be messier, hidden in the interplay of derivatives, miner activity, and global liquidity.

The takeaway? Before blaming the ETFs for your portfolio's red numbers, consider the whole chessboard. Sometimes the most obvious move isn't the one that wins the game.

November sees record $3.7 billion in spot Bitcoin ETF outflows

According to fund-data from SoSoValue, the eleven US-listed spot Bitcoin products saw $3.79 billion withdrawn over the month, surpassing the previous monthly record of $3.56 billion set in February.

BlackRock’s iShares Bitcoin Trust accounted for the largest share of the withdrawals with $2.47 billion exiting the product, while second-in-line Fidelity’s Wise Origin Bitcoin Fund lost US$1.09 billion. Combined, the two issuers represented 91% of November’s redemptions, concentrating the liquidations among the largest investment vehicles.

Alex Sonders, a strategist at Citi Bank, propounded that the movement of funds into or out of the products feeds directly into Bitcoin’s market value due to the creation and redemption mechanism used by ETF issuers. 

Bitcoin shed over 30% from its all-time high level above $126,000 achieved at the start of “Uptober.” By late November, heavy selling pressure had pulled the price down more than 33%, leaving it NEAR $84,000 and inflicting heavy losses on investors who bought the presumed “Bitcoin end-of-year rally.” Sonders told investors that Bitcoin could trade near $82,000 when 2025 comes to a close if the products do not attract meaningful new inflows.

At the same time, Bitcoin’s open interest on major derivatives exchanges fell 35% from October’s peak, as seen on CoinGlass. Traders who once relied on leverage to amplify exposure were instead abandoning positions in entirety out of fear of an October 10 liquidation event encore.

Balchunas expanded on this point in a reply to his initial post bashing Citi Bank’s analysis, writing, “The point of this tweet wasn’t to check math but to push back on this blame the ETF. ETFs have been like 3% of the total selling tops.” 

Bitcoin ETF net flows record 4-day positive streak, price still below $90,000 

After several weeks of heavy outflows, US spot Bitcoin ETFs posted a small net inflow at the start of this business week. Data from Farside Investors showed a $8.5 million net positive FLOW on Monday, leading to the fourth straight trading day of inflows. 

BlackRock’s IBIT recorded $74.03 million in redemptions yesterday, while Fidelity’s FBTC saw $67.02 million in net inflows. ARK Invest’s ARKB added US$7.38 million, helping offset the day’s losses from the largest spot BTC product AUM holder. 

Yet, Bitcoin failed to stand its ground at the $92,000 level it had reached last Friday, going back down to the $86,500 mark during early Tuesday’s trading sessions. The crypto market’s sentiment index is at extreme fear, and most of the king coin’s holders decided to cash in on profits over the weekend.

Looking at the latest ETF news, Vanguard Group announced a policy change that will allow ETFs and mutual funds holding cryptos to be traded on its platform. According to Cryptopolitan’s insight, the decision reversed the firm’s previous position that deemed digital assets “too speculative and volatile” for its clients.

This was first covered two months ago by @EleanorTerrett Today is just the official confirmation and time table. https://t.co/Swrwd4p6N3

— Eric Balchunas (@EricBalchunas) December 1, 2025

Beginning Tuesday, Vanguard will permit trading in select crypto-focused funds, including those offering exposure to Bitcoin, Ether, XRP, and Solana. 

“Cryptocurrency ETFs and mutual funds have been tested through periods of market volatility, performing as designed while maintaining liquidity,” said Andrew Kadjeski, head of brokerage and investments at Vanguard. 

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