Tax Loss Harvesting Sparks $825M Bitcoin ETF Exodus

Bitcoin ETFs are recording outflows of $825 million, mostly as a result of tax-loss harvesting. Selling in institutions has gone on straight through eight days as end-of-year strategies are in action.

The past week saw a severe institutional selling pressure on U.S. spot Bitcoin ETFs, estimated at about $825M outflows in eight straight trading days. The market behavior is still governed by year-end tax strategies.

Alek Carter on X has stated that the long-term selling is due to tax-loss harvesting. He observed that eight consecutive days of selling of institutions had taken place; however, pressure was expected to abate in a week.

Source: Alek Carter

BlackRock Leads the Institutional Exodus

Spot Bitcoin ETFs experienced net outflows of $175 million on the same day, December 24. BlackRock has IBIT, which initiated the withdrawals with an outflow of $91.37 million out of the fund, and the Ethereum spot ETFs recorded an outflow of $52.70 million out of the fund.

Newer products have remained tough in the wave of sales. Solana ETFs received new funds amounting to 1.48 million, and XRP ETFs received 11.93 million as new money.

This week is when the quarterly options of Bitcoin are due to expire, further de-risking institutional investors. Alek Carter on X said that bidding will soon see its way back into institutions.

Asia Emerges as Primary Accumulation Force

There has also developed a geographic movement in Bitcoin markets. The U.S. was the seller of prime, and the Asian buyers became the key accumulation force.

According to Ted Pillows on X, this inversion is something uncommon in traditional trends because in historical capital flows in crypto trading, the process used a different trend. This transformation is a major change in the dynamics of the market.

Source:   Ted Pillows

Whale activity in Binance went down dramatically in December. Big holder deposits were down almost 50 percent, and the monthly whale inflows were down to $7.9 bn. to $3.9 bn.

The data provided by CryptoQuant shows that the fall took place in a few weeks. Accounts with 100 to 10,000 BTC deposits transferred more than $466 million, and those with 1,000 to 10,000 BTC transferred more than 435 million.

Fewer whale deposits mean less selling pressure. The smaller the number of Bitcoins moving to exchanges, the smaller the liquidation risk, and Binance continues to dominate exchange flows.

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Bitcoin Breaks Free from Traditional Asset Correlation

Recently, the market behavior of Bitcoin has no longer been linked to traditional assets. It became almost zero correlated with the Nasdaq and negative with gold.

On X, Maartunn wrote that Bitcoin is no longer trading like a tech stock. He argued that it is establishing its own market regime.

Both the gold and silver prices continue to rise, and Bitcoin is in the range. Gold is priced at over $4,500 per ounce, and Bitcoin is yet to reach $90,000.

The analysis by CryptoQuant explains the divergence due to the increasing demand for safe assets. Geopolitical uncertainty is the resurgence of traditional hedges by the investor; low real interest rates are conducive to precious metals.

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