Bitcoin and Ether Prices Decline as BTC ETFs Hit Record-Breaking Outflows

Key Takeaways:

• Bitcoin has fallen from an all-time high of $108,268 to $94,476 in just three days, a loss of about $14,000.
• The Federal Reserve's interest rate cuts on December 18 could contribute to market volatility and uncertainty.
• US BTC ETFs experienced their largest one-day withdrawal ever, totaling $671.9 million.

The global crypto market has dropped significantly in the past few days. Bitcoin (BTC) fell from an all-time high of $108,268 on December 17 to $94,476 now, losing about $14,000 in just three days.

This decline has also impacted other cryptocurrencies. Over the last week, major altcoins like Ethereum, Solana, Dogecoin, Cardano, and Avalanche dropped by 17%, 20%, 29%, 26%, and 32%. Overall, the cryptocurrency market cap decreased by 8.27% today.

As a result, more than 435,000 traders were liquidated in the past 24 hours, leading to losses of $1.42 billion, according to Coinglass data. This wave of liquidations shows how volatile the market can be, with over $1.2 billion lost in bullish positions.

Why is Crypto Going Down?

The cryptocurrency market is falling today for several reasons. The main reason is the interest rate cuts made by the Federal Reserve on December 18. Although this might appear bullish for volatile assets such as Bitcoin (BTC), the Federal Reserve cautioned that inflation and unemployment could increase more than expected in 2025.

Meanwhile, Federal Reserve Chair Jerome Powell's bearish comments also contributed to the falling crypto market. When asked if the Fed sees any advantage in the US government holding Bitcoin, Powell said federal law prevents the central bank from owning cryptocurrencies.

This comment negates Donald Trump's campaign promises. The president-elect billionaire said he would stop the US government from selling large amounts of seized Bitcoin. Instead, he plans to keep BTC as an investment.

Although Trump has not officially discussed this with the Federal Reserve, reports say he wants to create a Bitcoin reserve starting in 2025.

Senator Cynthia Lummis also supports the idea of a Bitcoin reserve. She believes this will help build a strong financial system and reduce the US government's multi-trillion-dollar debt.

The national debt grows every day thanks to Washington’s spending addiction. My strategic bitcoin reserve constructs a resilient financial system to eliminate the debt. We need the #BITCOINAct ! https://t.co/nQtI4RuQ6F

— Senator Cynthia Lummis (@SenLummis) December 19, 2024

Related: Former U.S. Treasury Chief Dismisses Trump’s Strategic Bitcoin Reserve Plan as ‘Crazy’

Bitcoin ETFs See Record-Breaking Net Outflows

The crypto market has faced a significant decline, which has also affected Bitcoin exchange-traded funds (ETFs).

Recently, US Bitcoin ETFs experienced their largest one-day withdrawal since they launched, amounting to $671.9 million. Fidelity's FBTC ETF had the most significant outflow, with $208.5 million taken out, while BlackRock's IBIT ETF remained stable, showing no change in funds.

[BREAKING] The U.S. 🇺🇸 BTC ETFs just experienced their LARGEST net outflow since launch: 🔴$671.9M!#Fidelity's FBTC led the outflows with a record $208.5M, while #BlackRock's IBIT stayed steady with a $0 net flow.

This also marked the end of a 15-day inflow streak for BTC ETFs… pic.twitter.com/vZruAoUCF0

— Spot On Chain (@spotonchain) December 20, 2024

This situation ended two notable trends: a 15-day period of money flowing into Bitcoin ETFs and 18 days for Ethereum ETFs, highlighting a significant change in market sentiments.