A recent report by Global Head of Research at NYDIG, Greg Cipolaro, highlights a significant shift in the crypto market’s demand dynamics. Spot Bitcoin exchange-traded funds (ETFs), which once drove billions into Bitcoin, have experienced persistent outflows—$3.55 billion withdrawn in November alone, nearing the record $3.56 billion outflow seen in February. The withdrawal trend marks the highest monthly net redemptions in the history of these investment vehicles, signaling capital moving out of crypto and returning to traditional markets.
Cipolaro notes that the mechanics underpinning the 2024–25 rally have reversed: ETFs that aggregated funds into crypto are now a headwind. In November, trailing five-day flows for these funds turned negative despite earlier bullish projections. Meanwhile, stablecoins—a key liquidity source for traders—have seen a decline in total supply for the first time in months, and algorithmic stablecoins such as USDE have lost nearly half their supply since a major liquidation event on October 10.
Corporate digital asset treasuries (DATs) have also shifted positions. Premiums relative to net asset value have flipped into discounts, leading firms that once issued stock to buy Bitcoin now to liquidate holdings. Notable moves include several issuers unloading assets or buying back shares to shore up balance sheets. While no DAT has reported distress or solvency issues, the reversal underscores changing capital flows and heightened caution among institutional investors.
Cipolaro warns that these shifts may form a feedback loop: ETF outflows and stablecoin contractions could depress market liquidity, exacerbating price declines and prompting further redemptions. He advises stakeholders to prepare for greater volatility and potential capital flight, although he maintains a long-term bullish outlook for crypto based on underlying fundamentals.
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