Bitcoin dropped to below $82,000 in Asian trading on Friday, under pressure from renewed selling in global financial markets and significant outflows from US spot Bitcoin exchange-traded funds (ETFs).
Institutional flows reverse after streak of ETF inflows
At last check, Bitcoin was trading 1.3% lower at $81,623, extending its decline following a sharp sell-off in US equities on Thursday. The downturn marked a shift from the preceding three sessions, which were characterized by steady inflows into spot Bitcoin ETFs in the United States.
US spot Bitcoin ETFs registered $635 million in net outflows on Thursday, abruptly ending their three-day streak of net positive flows. Earlier in the week, these funds had attracted about $1.1 billion in net inflows, offsetting a portion of the $909.6 million in outflows recorded during the previous two weeks.
Thursday’s ETF outflows interrupted a broader recovery in institutional demand for Bitcoin, suggesting that renewed withdrawals could make it harder for the cryptocurrency to regain upward momentum if global market pressures persist.
Spot Bitcoin ETFs allow investors to gain direct exposure to Bitcoin without having to hold the asset themselves. Sustained buying through these funds has contributed to the overall demand for Bitcoin, supporting its price in recent months.
Bitcoin has now declined by roughly one-third from its all-time peak above $126,000 reached a year ago. While the cryptocurrency’s steady recovery since August had fueled speculation that prices might return to the $100,000 level this year, heightened volatility may temper these expectations.
Equity market slump triggers risk reduction
Bitcoin’s latest drop coincided with a significant sell-off across US stock markets, particularly within the technology and semiconductor sectors. The Nasdaq Composite slid 2.6% and the S&P 500 fell 1.2%. The Philadelphia Semiconductor Index, a benchmark tracking US-listed chipmakers, recorded a sharp 6.7% decline.
Nvidia shares declined by 4.4%, while Meta Platforms slipped by 7% despite stronger-than-expected revenue. Investors expressed concern over Meta’s rising expenditures related to artificial intelligence and upcoming share issuances.
Meanwhile, shares of SpaceX dropped 9% and Tesla slipped 3%, despite reporting positive third-quarter results. The downturn across technology stocks signaled heightened scrutiny of the costs associated with expanding AI infrastructure and large-scale innovation.
Analysts noted that the ongoing weakness in equities, particularly among risk-sensitive technology shares, has contributed to additional selling pressure in cryptocurrencies.
Mini dictionary: Philadelphia Semiconductor Index (SOX), a stock market index composed of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors. It serves as a widely followed benchmark for the performance of the US semiconductor industry.
| Index/Stock | 1-Day Change |
|---|---|
| Nasdaq Composite | -2.6% |
| S&P 500 | -1.2% |
| Philadelphia Semiconductor Index | -6.7% |
| Nvidia | -4.4% |
| Meta Platforms | -7% |
| SpaceX | -9% |
| Tesla | -3% |
Geopolitical tensions, oil prices drive further uncertainty
Broader macroeconomic and geopolitical factors have further weighed on market sentiment. Brent crude rose 3.7% to $112 per barrel as tensions between the United States and Iran fueled fears of oil supply disruptions.
Rising oil prices have prompted renewed concerns about inflation, which may complicate the outlook for central bank interest rates. Persistently high inflation could limit the potential for future monetary easing, adding pressure to risk assets like stocks and digital currencies.
The approach of the US midterm elections, now less than two weeks away, adds another layer of uncertainty. Investors are reassessing the possible economic and policy ramifications as geopolitical tensions persist in the Middle East.
