Key Takeaways
- BTC recovered to above $74,600 after post-CPI selling, putting its daily gain near 2%.
- U.S. spot Bitcoin ETFs logged $95M in net outflows on Nov. 10, pushing YTD redemptions over $1B.
- DWF Labs’ Martin Lee noted BTC needs risk-on demand alongside debasement flows to sustain a rally.
Derivatives Cool Off as Liquidations Drop Below $200M
After plunging to $72,787 following the release of hotter-than-expected U.S. consumer price index (CPI) data, bitcoin rebounded Wednesday, fluctuating between $73,000 and $74,000. The modest recovery came even as U.S. spot bitcoin exchange-traded funds (ETFs) recorded $95 million in net outflows Nov. 10, extending their losing streak to four consecutive days.
Although Bitcoin quickly reclaimed the $73,000 price threshold, it repeatedly lost momentum near the $74,000 mark, testing that level four times following Tuesday afternoon’s sell-off. By 12:25 p.m. EST, it was trading around $74,600, up about 2% on the day, bringing its market capitalization just under $1.5 trillion.
In the derivatives market, bitcoin’s relatively flat price action coincided with a significant decline in leveraged position liquidations. According to Coinglass data, bitcoin liquidations totaled more than $51 million, comprising approximately $8 million in long positions and over $43 million in shorts. Across the broader cryptocurrency market, liquidations totaled $199 million, with short positions accounting for over $131 million worth.
While macroeconomic headwinds have largely dictated bitcoin’s price action over the past week, analysts argue that sustained ETF outflows are compounding the selling pressure. According to data tracked by Bitcoin.com News, year-to-date net outflows from spot bitcoin ETFs have now surged past $1 billion. This persistent institutional drain offers a key structural explanation for why the cryptocurrency remains under its opening price for the year (nearly $87,600).
ETF Flows Lag Price Movements, Says DWF Labs Expert
However, one expert argues that ETF flows are no longer a reliable gauge of institutional conviction, despite their widespread use by investors. Martin Lee, market insights lead at DWF Labs, questions the predictive value of ETF flows, arguing that withdrawals have historically accelerated near market bottoms, while inflows have gained momentum near market peaks.
Lee contends that a more consequential factor in bitcoin’s recovery is the distinction between two sources of liquidity that have supported previous rallies. According to the DWF Labs executive, while the dollar debasement trade can cushion bitcoin against weakness in other risk assets, it is unlikely to sustain a rally without broader risk-on demand. This leaves bitcoin facing 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.
Citing an internal analysis, Lee argued that ETF flows tend to follow bitcoin’s price movements rather than lead them, suggesting they are 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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