Bitcoin Breaks Correlation with Surging Stock Market Amid High ETF Outflows

Bitcoin fails to mirror major stock index gains

Bitcoin (BTC) recently stopped following the movements of U.S. stocks, ending a weeks-long trend where the cryptocurrency moved in tandem with major indices. On Monday, while the S&P 500 saw its best day since April and the Nasdaq Composite rose by 2.7%, Bitcoin remained stagnant.

The largest cryptocurrency fell slightly by 1.4% since the start of the day on Tuesday. This decoupling suggests that Bitcoin is currently being influenced by factors other than the broader performance of the traditional technology and stock sectors.

Key numbers from the recent market shift

• U.S. spot Bitcoin ETFs lost $201 million in a single day on Monday.
• Total outflows from these funds have reached approximately $1.5 billion since November 2.
• The number of non-empty Bitcoin wallets—digital tools used to store the asset—has decreased by about 108,700 since mid-October.
• BlackRock’s IBIT fund has experienced seven consecutive days of investor withdrawals.

Increased supply and cooling retail interest

Data from Farside Investors indicates that Bitcoin exchange-traded funds (ETFs) are now down roughly $1.1 billion for the year. This is a significant shift compared to the previous two years, which each saw more than $20 billion in net inflows. An ETF is an investment product that allows people to track the price of an asset without holding it directly.

Selling pressure has also come from the mining sector. MARA Holdings recently disclosed the sale of 13,597 BTC for approximately $1.1 billion over the last six weeks. Additionally, retail interest appears to be thinning, as reflected by the drop in active wallet addresses reported by Santiment.

New York Stock Exchange selects Avalanche for new platform

While Bitcoin’s price struggled, other areas of the industry saw progress. The New York Stock Exchange (NYSE) chose Avalanche to settle trades on a planned 24/7 tokenized securities platform. A blockchain like Avalanche is a digital ledger that records transactions across a network of computers. Following this announcement, the AVAX token increased in value by about 5%.

Upcoming inflation data to test market resilience

Investors are now waiting for U.S. inflation data, known as the Consumer Price Index (CPI). Economists expect that inflation rose by 0.3% in October, which would be a slower pace than the previous month. While this data could provide some support for the market, analysts at BRN suggest that Bitcoin needs significant new buying interest to recover, rather than just favorable economic reports.

Sources

• CoinDesk