Bitcoin (BTC) Price Tumbles More Than 10% in the Past Two Days, Rattling the Crypto Market

The pullback has left investors questioning the role of US spot-based Bitcoin ETFs in the downturn, as data emerges revealing significant outflows from these products.

In the past two days, the Bitcoin price has tumbled more than 10%, rattling a crypto market that had seen a sustained period of relative stability. The pullback has left investors questioning the role of US spot-based Bitcoin ETFs in the downturn, as data emerges revealing significant outflows from these products.

Highlighting the trends in his post on X, Vetle Lunde, Head of Research at K33 Research, tabulated the staggering outflows from BTC ETPs, noting that yesterday’s outflows were the largest since the launch of US spot ETFs. He also mentioned that February has seen a strong bias towards outflows, with 69% of trading days concluding with more outflows than inflows.

Are Bitcoin ETFs To Blame?

While the single-day figures are noteworthy, Lunde emphasizes the broader implication of persistent outflows throughout February. However, not all market participants necessarily view these outflows as a doomsday scenario.

Adam (@abetrade) from Trading Riot provides a different perspective, arguing that dramatic ETF flows have historically been observed to precede market corrections, which eventually revert to the mean. Except for an exceptional inflow following Trump’s win on November 7th, such “big red numbers” typically trigger panic selling, setting the stage for a subsequent rebound.

According to Adam, the current situation might be an overreaction, and once the initial wave of selling subsides, the market could stabilize or even see a relief rally. This view is based on historical precedents where similar episodes did not lead to sustained downturns, suggesting that the prevailing sentiment could eventually turn contrarian.

“Except for November 7th, when large inflows followed Trump's win, every other occurrence of outsized inflows or outflows has been a mean-reverting signal. Generally, people see a big red number and start panic selling, or vice versa, which ends up sending the market in the opposite direction,” Adam stated.

Further examining the market dynamics, Zaheer Ebtikar, Chief Investment Officer and founder of Split Capital, links the narrative to the evolving interplay between CME Futures and the futures premium. Until recently, CME Futures were trading at nearly double the premium of conventional cryptocurrency exchanges. But in recent days, this premium has corrected significantly to below 5%—a level approaching the risk-free rate.

Ebtikar highlights the significance of this correction. As the futures premium normalized, market participants appeared to “throw in the towel” on Bitcoin ETFs, with CME Futures open interest falling to its lowest since the last election cycle. This decline in open interest is noteworthy given the implications for liquidity and willingness to hold the asset class.

Furthermore, Ebtikar points out that the period also saw nearly record trading volumes on the CME. This surge in activity underscores the heightened interest and engagement in futures trading, contrasting with the decreasing interest in ETFs.

This shift is evident in the interplay between a shrinking futures premium and rising futures volume.

"In a paradoxical way, futures premium down = futures start getting bid and ETFs start dumping. The final tell here was CME Futures volume in the past couple of days reaching nearly record highs since the election," Ebtikar concludes.

Macro Headwinds

On a broader macroeconomic note, Singapore-based QCP Capital describes a global risk-off move affecting equities, gold, and BTC, amid growing whispers of stagflation. Consumer sentiment has taken a hit, suggested by a weaker-than-expected Consumer Confidence Index of 98 (versus 103 expected), while the US administration’s newly confirmed 25% tariffs on Canadian and Mexican imports—effective March 3—have further dampened sentiment.

As QCP Capital sees it, investors are growing weary of potential trade escalations and elevated inflation, which together create an atmosphere of uncertainty. The once-crowded “Magnificent 7” equity trade is unraveling, and “long crypto” has also been identified as one of the most overextended positions. In choppy markets, crypto is often the first to be liquidated, reinforcing the negative price action.

Looking ahead, QCP Capital points to a pair of key events that could set the tone. The NVIDIA earnings and this week’s PCE print. Results from the chipmaker, which has ridden the wave of AI-driven demand, could trigger another leg down if guidance disappoints. The upcoming Personal Consumption Expenditures (PCE) data is forecast at 2.5% year-over-year, still above the Federal Reserve’s 2% target. Until inflation convincingly trends lower, the Fed is likely to keep rates steady. Markets currently price two rate cuts in 2025, the first in June or July.

But QCP Capital warns that markets remain fragile, advising caution as consumer and retail sentiment surveys—often leading indicators—could provide early signals of a stagflატ