Bitcoin Latest Updates: ETF Arbitrage Tactics Heighten the Danger of Bitcoin Price Drops

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Bitcoin Latest Updates: ETF Arbitrage Tactics Heighten the Danger of Bitcoin Price Drops

Bitget-RWA2025/11/21 11:14

By:Bitget-RWA

- U.S. crypto markets face crash risks as major Bitcoin ETFs like IBIT and FBTC record $3.79B in November outflows, driven by profit-taking after October's rally. - Experts warn of 50%+ price corrections to flush out inexperienced investors buying ETFs/DATs, with leveraged positions and arbitrage trades amplifying downward pressure. - Bitcoin fell below $83,400 as ETF holders' average cost basis exceeds current prices, while arbitrage strategies involving futures shorting risk mechanically lowering prices.

The U.S. crypto sector is facing heightened anxiety over a possible market collapse, driven by unstable

Bitcoin

ETF movements and a surge of novice participants. Leading spot Bitcoin ETFs, such as BlackRock's

IBIT

and Fidelity's FBTC,

experienced unprecedented withdrawals in November

, with total redemptions exceeding $3.79 billion, Farside Investors reports. This comes after $1.32 billion exited between November 10–14,

as those who bought during October’s surge started reducing their holdings

The wave of withdrawals has deepened worries about a significant market downturn. Alliance DAO’s co-founder QwQiao

cautioned that the next bearish phase might see a 50% drop

to "wash out uninformed capital"—investors buying ETFs and digital asset treasuries (DATs) without grasping the risks. "This never ends well," he posted, pointing out that structural flaws, such as leveraged bets and ETF arbitrage, could worsen the decline. Placeholder’s Chris Burniske shared similar views,

saying the "DAT sell-off era is just starting"

, and that forced sales could become more severe.

Bitcoin Latest Updates: ETF Arbitrage Tactics Heighten the Danger of Bitcoin Price Drops image 0

Bitcoin’s value has

dropped under $83,400

, marking its lowest point in seven months as ETF outflows picked up speed. The average entry price for Bitcoin ETF investors is now

above the current market value

, putting many holders at a loss. BlackRock’s IBIT, the top U.S. spot Bitcoin ETF,

was responsible for 63% of November’s withdrawals

, losing $2.47 billion, while Fidelity’s FBTC saw $1.09 billion in outflows.

Analysts such as Rachael Lucas from BTC Markets observed that the withdrawals reflect

a "major shift in sentiment" compared to the inflows seen earlier in November, further impacted by broader unease over tech stocks like Nvidia.

Adding to the instability, arbitrage tactics have skewed ETF demand. BitMEX co-founder Arthur Hayes

pointed out that a significant portion of IBIT’s inflows originated

from hedge funds shorting futures to profit from price differences—a strategy that reverses as premiums shrink, mechanically driving prices down. "They’re not actually bullish on Bitcoin," Hayes remarked. "They’re here for a few extra basis points above Fed Funds."

Despite the ongoing volatility, some believe stabilization is possible. Lucas highlighted that total ETF inflows still amount to $57.4 billion, with assets reaching $113 billion—representing 6.5% of Bitcoin’s market value—indicating that institutions remain engaged

based on recent analysis

. Still, both QwQiao and Burniske contend that the market must first go through a "difficult capitulation" to clear out leverage and speculative excess.

With Bitcoin trading near crucial support, the interaction between ETF trends, economic uncertainty, and retail investor mood is set to shape the next stage of the cycle. For now, warnings from veteran market participants highlight a delicate balance—one that could quickly deteriorate if withdrawals and forced liquidations persist.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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