Bitcoin ETF Outflows Hit $3.5 Billion in November as Stablecoin Supply Drops

TLDR

• Spot bitcoin ETFs have recorded $3.55 billion in outflows during November, marking near-record capital withdrawals from the market.
• Stablecoin supply has declined for the first time in months, with USDE token losing nearly half its supply since October.
• Digital asset treasury (DAT) companies that previously bought bitcoin are now selling assets or buying back shares as premiums turned to discounts.
• Large bitcoin purchases from Strategy and El Salvador failed to prevent the price decline to $84,000.
• NYDIG maintains long-term bullish outlook despite warning of volatile near-term market conditions driven by reversing demand mechanisms.

Bitcoin’s recent price decline to $84,000 stems from shifting market mechanics rather than investor sentiment, according to NYDIG’s Global Head of Research Greg Cipolaro. The same mechanisms that drove bitcoin’s rally to all-time highs earlier in 2024 have now reversed direction.

Spot bitcoin ETFs, which served as the primary demand source during the 2024-25 rally, have experienced persistent redemptions throughout November. Data from SoSoValue shows these investment vehicles have recorded $3.55 billion in outflows this month. This figure nearly matches the record $3.56 billion outflow seen in February, putting November on track for the highest monthly withdrawal since ETF launch.

The trailing five-day flows for these ETFs have turned negative after funneling billions of dollars into bitcoin during the first half of the year. This reversal marks a shift from what Cipolaro described as a once-reliable inflow engine into a headwind for the market.

Stablecoin supply has also declined for the first time in months, signaling capital leaving the crypto ecosystem. The algorithmic USDE token has lost nearly half of its outstanding supply since the October 10 liquidation shock. During that event, USDE fell to $0.65 on Binance, triggering what Cipolaro characterized as aggressive capital withdrawal from the system.

Bitcoin dominance has increased during this period, rising above 60% in early November before settling around 58%. Cipolaro noted this pattern is typical during market drawdowns, as capital consolidates into the most established and liquid asset in the crypto ecosystem.

Digital Asset Treasury Companies Reverse Strategy

Corporate treasury trades involving digital asset treasury (DAT) companies have also broken down. These firms previously issued stock to purchase bitcoin when their shares traded at premiums to net asset value. As those premiums flipped to discounts, the companies changed course.

Some DAT companies are now selling bitcoin holdings or buying back shares. Sequans unloaded bitcoin earlier this month to reduce debt obligations. Cipolaro pointed out that while these reversals represent a clear shift from a strong demand engine to a potential headwind, no DAT company has shown signs of financial distress.

Leverage levels remain modest across the DAT sector, and interest obligations are manageable. Many DAT structures allow issuers to suspend dividend or coupon payments if needed. This provides a cushion even if market conditions worsen.

Large bitcoin purchases during the price decline failed to halt the downward momentum. Strategy and El Salvador both made purchases during the dip. Cipolaro found it telling that these sizable acquisitions did not slow the decline.

The report identified a $19 billion liquidation event on October 10 as the trigger for the current feedback loop. The mechanisms that previously pushed prices higher are now reinforcing the decline. This pattern follows what Cipolaro described as classic cyclical mechanics seen in previous market cycles.

Despite the near-term volatility, Cipolaro maintains that bitcoin’s long-term outlook remains intact. Bitcoin continues gaining institutional traction, and sovereign interest is building. Its role as a neutral, programmable monetary asset remains in play according to the analysis.

The report suggests investors should prepare for an uneven path forward. Past cycles indicate the environment may be emotionally taxing and marked by sudden price dislocations. Cipolaro advised maintaining secular conviction while acknowledging the challenging near-term conditions shaped by flow reversals and reflexive market behavior.

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