Bitcoin ETFs were resilient as October saw Bitcoin plunge by 20%. Outflows remained under $1 billion, which was not much of a drawdown for such a big event in the market.
According to Bloomberg analyst Eric Balchunas, the net outflows varied at 722 million in the month. Thursday ended the streak of six consecutive redemptions with the receipt of $240 million of fresh inflows.
Balchunas explained that ETF investors had stayed intact even during the downturn. He pointed out that conventional investors did not fear furiously even when Bitcoin plummeted sharply.
The boomers using ETFs are not a joke, he replied, indicating that the pressure to sell was exerted by big shareholders, but not by institutional funds.
Bitcoin whales dump holdings as ETFs steady market
The sell-off was initiated by Bitcoin whales and long-term investors who made profit around the 100,000 benchmark. During the crash, these investors sold an estimated 400,000 BTC, which further deteriorated the downfall.
The event in October also wiped off 20 billion in leveraged crypto holdings within a span of 24 hours. Analysts referred to it as the worst crypto liquidation ever.
CryptoQuant analyst Maartunn confirmed that long-term holders have sold 405,000 BTC, which were worth $41.3 billion at the moment. This change was a departure to an uncharacteristic strategy of holding.
The crash, however, was followed by increased market sentiment as a result of ETF inflows. Analysts added that the constant demand of ETF contributed to creating a price bottom.
Institutional investors do not regard ETFs as relatively short trades. They make slow purchases that make them less volatile and dampen the falling prices.
ETF inflows boost Bitcoin’s institutional strength
In July and August, almost 50% of ETF investors surveyed by a brokerage and financial services firm, Charles Schwab, said they intended to buy crypto ETFs, exceeding emerging markets equities, commodity funds, and real assets.
On X, author Shanaka Anslem Perera said that ETFs are slow money, because RIAs, pensions, and 401(k) investors invest by the rule and not rumor and thus rebalance and even average in as traders freak out, unwind, and cause a liquidation cascade.
Analysts further added that Bitcoin ETFs have become stabilizers in the market structure. The constant inflow is opposite to the fast selling of traders and whales.
The institutional base of Bitcoin is increasing, with regulated funds increasingly drawing capital. This change is an indicator of belief in long-term use of Bitcoin as a store of value.
The crash of October tested institutional and retail belief. The traders were forced to sell, and the investors in the ETFs silently accumulated next cycle support.