ETFs in Spotlight as Price of Bitcoin Sinks Below $96,000

Core Viewpoint - The cryptocurrency market experienced a significant selloff on November 14, with Bitcoin's price dropping below $96,000 for the first time in six months, reflecting a decline of over 20% from its October high of more than $126,000 [1] Market Overview - Major cryptocurrencies, including Ether, Solana, and Binance's BNB, saw declines ranging from 6% to over 10%, indicating a broad market retreat [2] - Crypto-linked equities, such as Coinbase and Strategy, also faced losses, with share prices falling more than 1% and 3% respectively [2] Investment Implications - The rapid depreciation and volatility in the cryptocurrency market should prompt investors to reassess their positions in Bitcoin Exchange-Traded Funds (ETFs) and other crypto-linked investments [3] Market Drivers - The primary catalyst for the recent selloff is a shift in sentiment regarding macroeconomic risks and monetary policy, with traders reducing expectations for an interest rate cut by the Federal Reserve due to delayed economic data [4] - Liquidity in the market has significantly decreased, with Bitcoin-investing ETFs experiencing outflows of approximately $870 million, marking the second-largest withdrawal since their introduction in January 2024 [5] - Analysts have confirmed that the crypto market has entered a bear regime, citing weakening ETF flows and continued selling by long-term holders [5] ETF Analysis - The substantial outflows from ETFs and the confirmation of a bear regime indicate a decline in institutional and long-term support, suggesting that investors should review their exposure to Bitcoin ETFs [7] - iShares Bitcoin Trust (IBIT) has net assets of $75.44 billion and has risen 0.8% year to date, with an average daily trading volume of 62.55 million shares [8] - Fidelity Wise Origin Bitcoin Fund (FBTC) has net assets of $22.50 billion, gaining 0.7% year to date, with an average daily volume of 5 million shares [9] - Grayscale Bitcoin Trust ETF (GBTC) has assets under management of $16.01 billion, but has lost 0.3% year to date, with an average daily volume of 5.54 million shares [10][11] - Invesco Galaxy Bitcoin ETF (BTCO) has a net asset value of $93.99, gaining 0.7% year to date, with an average daily volume of 187,517 shares [12]