Bitcoin ETFs Reverse Course with $75M Inflow, Signaling Capital Shift Towards Solana and Emerging Altcoins

After a prolonged “capital exodus” that saw continuous outflows for five trading days, US Bitcoin Spot Exchange-Traded Funds (ETFs) finally experienced a significant turnaround on Wednesday. The sector recorded a net inflow exceeding $75 million, halting a cumulative bleed of over $2.2 billion. This pivotal shift was accompanied by clear signs of capital rotation, with Solana ETFs unexpectedly emerging as a major magnet for investor funds.

Bitcoin ETFs Stem the Tide: BlackRock Leads the Recovery

According to data from SoSoValue, the wave of withdrawals from the 12 US Bitcoin spot ETFs has finally ceased. The collective net inflow reached $75.47 million. BlackRock’s IBIT fund spearheaded this recovery, attracting a substantial $60.61 million and effectively shaking off the previous day’s shadow of a $523 million net outflow. Grayscale’s mini Bitcoin Trust ETF (BTC) also demonstrated robust performance, drawing in $53.84 million.

However, not all Bitcoin ETFs enjoyed this resurgence. Fidelity’s FBTC registered a net outflow of $21.35 million, while VanEck’s HODL saw $17.63 million exit its coffers.

Navigating Macroeconomic Headwinds and Market Jitters

The preceding “black consecutive 5-sell” period, spanning November 12th to 18th, witnessed Bitcoin ETFs collectively lose over $2.26 billion. This significant withdrawal coincided with a broader correction across the cryptocurrency market, as Bitcoin retreated from its recent peak, dipping below $90,000 and fueling a sharp rise in market panic.

Vincent Liu, Investment Director at Kronos Research, offered a nuanced perspective, suggesting that the Bitcoin ETF capital outflow was less an “institutional withdrawal” and more a “position readjustment.” He anticipates that a clearer macroeconomic outlook would swiftly reawaken investors’ risk appetite.

Yet, the macroeconomic landscape remains clouded. Recent hawkish statements from Federal Reserve Chair Jerome Powell have dampened market enthusiasm for a December interest rate cut. CME’s FedWatch tool indicates that the probability of a 25 basis point rate cut next month has plummeted to 33.8%, a significant drop from nearly 50% earlier in the week. Such uncertainty has left traders on edge, reflected by the “Crypto Fear & Greed Index” currently at a low of 11, signaling “Extreme Fear.”

Analysts also pointed to the previous 43-day US government shutdown, which froze non-essential spending, as a primary contributor to market liquidity drain and subsequent pressure on crypto prices. With government operations resuming, a gradual return of liquidity is anticipated.

Altcoins Take Center Stage: Solana Shines as Ethereum Fades

While Bitcoin ETFs found their footing, Ethereum spot ETFs continued their struggle, enduring investor sell-offs for a seventh consecutive day with an additional $37.35 million outflow on Wednesday.

In stark contrast, newly listed altcoin ETFs demonstrated remarkable strength. Solana spot ETFs recorded a substantial net inflow of $55.60 million on Wednesday. With the recent listing of two new funds, there are now six Solana ETFs actively trading in the US market.

Other altcoins also garnered attention: Canary Capital’s Ripple (XRP) spot ETF attracted $15.80 million, and its Hedera (HBAR) ETF saw a net inflow of $577,000. However, the Litecoin (LTC) ETF remained largely overlooked.