Why did Bitcoin fall today? ETF saw a massive outflow of 2.26 billion, and traders are holding their ground.

Why did Bitcoin fall today? After attempting to rebound to $93,500 without success, the Bitcoin price tested the $89,000 level again, resulting in the liquidation of $144 million in leveraged long positions, followed by a rebound to around $91,600. The Bitcoin derivatives market remains stable, with the monthly futures premium maintaining around 4%, the perpetual futures funding rate nearing 4%, and the options delta skew remaining at 11%.

Reasons for Bitcoin's fall today: ETF has suffered a loss for five consecutive days totaling 2.26 billion

(Source: Trading View)

The primary reason for Bitcoin's decline today is the continued outflow from spot Bitcoin ETFs. The spot Bitcoin exchange-traded funds (ETFs) have seen net outflows for five consecutive trading days, putting pressure on trader sentiment. Over $2.26 billion has flowed out of these products, as market makers typically allocate executions throughout the trading day, resulting in ongoing selling pressure. Although this figure is striking, it accounts for less than 2% of the overall market size of Bitcoin ETFs.

The impact of ETF capital outflows on the market lies not only in the absolute amount but also in its continuity and psychological effects. When institutional investors withdraw from the Bitcoin ETF for five consecutive days, it sends a clear signal: professional fund managers are reassessing the short-term outlook for Bitcoin. This collective behavior often triggers a herd effect, prompting more investors to follow suit and withdraw.

However, in relative terms, the outflow of 2.26 billion dollars accounts for only a small portion of the overall market. This means that although short-term selling pressure is evident, it has not reached the level of panic selling. More importantly, this outflow may partially reflect profit-taking behavior rather than fundamental doubts about Bitcoin's long-term value. After all, Bitcoin's cumulative increase since mid-2022 is still nearly 198%, and it is normal portfolio management behavior for institutional investors to moderately reduce their holdings at high levels.

From a macro perspective, the outflow of ETF funds is also related to broader market risk aversion sentiment. When traditional financial markets experience volatility, institutional investors often prioritize reducing exposure to high-volatility assets, and although Bitcoin is viewed by some as “digital gold,” it is still categorized as a risk asset in the short term. Therefore, the outflow of ETFs may simply be a part of an overall risk management strategy rather than a bearish stance specifically towards Bitcoin.

The resilience of the futures market shows that traders refuse to give up

(Source: Laevitas)

Despite the pressure on the spot market, the Bitcoin futures market has shown unexpected resilience. On Wednesday, the monthly premium of Bitcoin futures remained about 4% higher than the spot market, slightly below the typically neutral level of 5%. Some analysts believe that when the price of Bitcoin fell below $89,200 on Tuesday, the indicator briefly turned negative, but the aggregate data from major exchanges indicates otherwise. The discount of futures contracts usually signifies strong bearish sentiment, but the current premium structure suggests an overall bullish trend in the market.

The data from perpetual futures contracts further confirms this resilience. On Wednesday, the funding rate for Bitcoin perpetual futures was close to 4%, which is basically in line with the average value over the past two weeks. Although this level still reflects bearish sentiment, the shorts have not shown panic or excessive confidence. This weak situation seems to be merely retrospective, as the price has been on a downward trend since Bitcoin reached its historic high on October 6.

Three Major Signals of Resilience in the Futures Market

Monthly premium maintains at 4%: Slightly below neutral but not negative, indicating that long positions have not completely exited.

Perpetual funding rate stable: The annualized level close to 4% reflects caution but not panic.

Options delta skew 11%: The put options are only at a premium of 6%, far from extreme tightness.

(Source: Laevitas)

The data from the options market provides a third perspective. Over the past week, the delta skew of Bitcoin options has remained around 11%, indicating that traders have not significantly adjusted their risk expectations. Caution persists, as the trading price of put options (sell options) is still 6% higher than the neutral premium of call options (buy options). This suggests that, although the current levels are far from extreme tension, whales and market makers still feel uneasy about downside risks.

The resilience of this futures market stands in stark contrast to the weakness of the spot market, revealing the true thoughts of professional traders: they believe the current decline is a temporary adjustment rather than a trend reversal. Futures traders are generally more professional than spot investors, and their collective judgment holds significant reference value. When futures premiums and funding rates remain at relatively stable levels, it usually indicates that the market is waiting for a clear directional breakout rather than a one-sided collapse.

Tech Stock Crash and Multiple Macroeconomic Pressures

The second key reason for Bitcoin's decline today is the weakness in the tech sector. Over the past 30 days, the stock prices of some of the world's largest tech companies have fallen by 19% or more, including Oracle (ORCL US), Upstart (UI US), Oklo (OKLO US), and Roblox (RBLX US). This spread of risk aversion is not limited to cryptocurrencies, but also reflects market concerns about the softness in the U.S. job market. High-risk sectors, especially those related to artificial intelligence infrastructure, have seen the most significant declines.

The correlation between technology stocks and Bitcoin has significantly strengthened in recent years. When the tech sector performs strongly, Bitcoin often rises in tandem, and vice versa. This correlation stems from the shared investor base and risk attributes of both. Technology stock investors are typically open to emerging technologies and are more willing to allocate some of their capital to digital assets like Bitcoin. When technology stocks face sell-offs, these investors often reduce their exposure to Bitcoin simultaneously.

The consumption sector is also facing additional pressure, affected by the U.S. government shutdown, which has lasted until November 12. Retailer Target (stock code: TGT US) lowered its full-year profit forecast on Wednesday and warned that holiday season sales would be weak due to the continued decline in consumer purchasing power. Inflation remains a significant concern as it limits the Federal Reserve's ability to lower interest rates.

According to Yahoo Finance, despite Nvidia's upcoming quarterly results, some analysts have questioned “the nature of Nvidia's investments in artificial intelligence on its clients.” This skepticism reflects growing market concerns about an AI bubble. If the AI investment frenzy cools down, tech stocks may face greater pressure, which could in turn weigh down Bitcoin.

Multiple Pressures of the Macroeconomy

Tech Stock Crash: Major tech companies' stock prices fell by 19% or more, risk appetite declined.

Weak Employment Market: The U.S. labor market data has worsened, raising the risk of economic recession.

Impact of Government Shutdown: Continuing until November 12, affecting consumer confidence.

Inflation pressure continues: Limits the Federal Reserve's space for rate cuts, high interest rate environment is unfavorable for risk assets.

AI Investment Doubts: The market begins to question the return on investment in AI infrastructure.

It is unclear why investors no longer believe that Bitcoin is “digital gold,” but at this stage, whether Bitcoin can return to the $95,000 level is closely related to the improvement of the macroeconomic situation. When traditional markets face multiple pressures, it is difficult for Bitcoin to stand out on its own.

The true thoughts of traders revealed by derivative data

By synthesizing all derivatives data, a clear conclusion can be drawn: although the reasons for Bitcoin's fall today are complex, professional traders have not given up their long positions. The three indicators of futures premium, funding rate, and options skew collectively indicate that the market is in a cautious but not panicked state. Traders are taking precautions, but the data shows that they have not yet reached panic levels.

Analysts claim that when the price of Bitcoin reaches $90,000, it is an excellent opportunity to “buy with your eyes closed.” This perspective is based on historical data: every time Bitcoin has pulled back 15% to 20% from a high, it has often been a medium to long-term buying point. Currently, Bitcoin has pulled back about 18% from its historical high on October 6, which falls right within this range.

Does the resilience of the futures market indicate that traders expect prices to reverse soon? The answer, based on the data, is affirmative. When futures premiums remain positive, funding rates are stable, and the skew of options has not significantly widened, it usually means that the market is building a bottom. Professional traders do not maintain this structure when they are genuinely bearish; their behavior reveals confidence in the future market.