Crypto ETP Outflows Hit Record $2.9 Billion – Is This the Start of a Market Crash?

The crypto market has seen major shifts this week as crypto ETP outflows soared. Investors also withdrew billions, creating the largest Bitcoin ETF losses in this sector’s history. Several economic factors, including security threats and shifting policies, fueled this trend. Market liquidations also surged, affecting traders and strengthening bearish sentiment. Bitcoin’s Spent Output Profit Ratio (SOPR) and open interest levels hint at possible market changes. As conditions evolve, investors monitor key signals for stability or further turbulence. The coming days will reveal whether the market rebounds or experiences more downward pressure.

Billions Pulled from Crypto ETPs

The crypto ETPs have seen record-breaking outflows this week. These exchange-traded products recorded a $2.9 billion loss. This is the latest and the biggest wave of withdrawals in a three-week streak. This sudden and massive spike in outflows can be attributed to a number of macroeconomic factors. For instance, the $1.5 Billion Bybit hack created doubts about crypto safety. Other economic factors, such as the FED’s stance on monetary policy and the US tariffs, have also created doubts.

Provided by (CoinShares/Bloomberg); Published on CoinDesk; March 4, 2025. 

Based on Graph 1, this 3-week streak of crypto ETP outflows followed a 19-week-long period of consecutive inflows. However, because of the challenges mentioned, crypto exchange-traded products have now seen $3.8 billion in outflows. BTC ETPs saw the biggest losses, losing $2.6 billion just in the past week. As such, Bitcoin ETF losses also saw an increase, creating one of the worst weeks for this sector. Investors pulled $1.3 billion out of BlackRock’s iShares Bitcoin Trust alone. This was the largest weekly loss recorded since this ETF’s lunch.

Wave of Liquidations Rocks the Market 

Continuing this bearish trend for the crypto market, a new wave of liquidations has also hit the market. After a two-day uptrend triggered by the US crypto reserve announcement, the market is in red again. As crypto assets lost their gains and began falling again, 180,000 traders’ positions were liquidated. This created a $630 million wave of liquidation, with the single biggest liquidated position being $10 million.

Bitcoin’s Key Metrics Indicate a Turning Point

Another point worth noting is that Bitcoin’s Spent Output Profit Ratio (SOPR) has hit  0.95. The  Spent Output Profit Ratio measures the number of wallets that have held BTC between 1 hour and 155 days. This will give a number that is lower than  1, which means that the short investors are selling at a loss. If the number is bigger than 1, this means that investors are selling with profits. Historically, a number lower than 1 can also be a sign of an incoming surge.

An important indicator for BTC is the open interest. BTC’s open interest has gone down and reached a 6-month low. This level was last seen before Bitcoin had started its historical rally towards $109,000. So, the last time BTC experienced this level of open interest, it was trading between $50,000 and $60,000. However, this can be positive news, as it can mean that the BTC has hit its bottom. This means that the price of BTC will most likely not fall further.

Short-Term Volatility or Long-Term Gain?

As the market keeps evolving, investors must watch key metrics like SOPR and be open to trend reversal signals. This is because market sentiment will shift constantly based on regulations, macroeconomic policies, and security risks. Short-term volatility will likely persist, yet strong Bitcoin support could trigger a rebound. Investors should proceed carefully in this volatile market. Diversification, risk management, and tracking on-chain data can help manage risks, putting investors closer to success.