Derivatives Market Cools as Liquidations Fall Below $200M
Bitcoin plunged to $72,787 after hotter-than-expected U.S. consumer price index (CPI) data was released, then rebounded Wednesday, moving between $73,000 and $74,000. The modest recovery came despite U.S. spot bitcoin exchange-traded funds (ETFs) posting $95 million in net outflows on Nov. 10, extending their losing streak to four straight days.
Bitcoin quickly regained the $73,000 price level but repeatedly lost momentum near $74,000, testing that mark four times after Tuesday afternoon’s sell-off. By 12:25 p.m. EST, bitcoin was trading at around $74,600, up about 2% for the day, with its market capitalization just under $1.5 trillion.
Bitcoin’s relatively flat trading coincided with a sharp decline in leveraged position liquidations in the derivatives market. Coinglass data showed that bitcoin liquidations topped $51 million, including about $8 million in long positions and more than $43 million in shorts. Liquidations across the wider cryptocurrency market totaled $199 million, with short positions accounting for more than $131 million.
Macroeconomic headwinds have largely driven bitcoin’s price action over the past week, but analysts say persistent ETF outflows are adding to the selling pressure. Data tracked by Bitcoin.com News show that year-to-date net outflows from spot bitcoin ETFs have now exceeded $1 billion. This ongoing institutional outflow helps explain structurally why the cryptocurrency remains below its opening price for the year, nearly $87,600.
DWF Labs Expert Says ETF Flows Trail Price Movements
One expert, however, argues that ETF flows are no longer a reliable measure of institutional conviction, despite investors’ widespread use of them. Martin Lee, market insights lead at DWF Labs, questions their predictive value, saying withdrawals have historically accelerated near market bottoms, while inflows have gathered pace near market peaks.
Lee says a more important factor in bitcoin’s recovery is the difference between two sources of liquidity that have supported earlier rallies. The DWF Labs executive says the dollar debasement trade may cushion bitcoin when other risk assets weaken, but is unlikely to sustain a rally without broader risk-on demand. As a result, bitcoin faces a liquidity challenge that ETF flow data alone cannot explain.
“BTC can draw on two distinct sources of liquidity: the dollar debasement trade, and broader risk-on flows. It benefited from both at different points in the 2020–2022 cycle. In August, the return of the debasement narrative let it hold up while risk-on AI names corrected sharply, and it has outperformed gold over the past six months. The limitation is that debasement alone rarely sustains a rally when the broader market is risk-off,” Lee said in a note.
Referring to an internal analysis, Lee argued that ETF flows tend to follow bitcoin’s price moves rather than precede them, making them more useful as a reflection of prevailing market sentiment than as a predictive indicator.
“They haven’t been good indicators of what we can expect price to do next,” Lee said.
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