U.S. Bitcoin Funds See $643.3 Million in Daily Outflows
Key Facts
U.S. spot Bitcoin funds recorded net outflows of $643.3 million on Friday, October 30, their largest daily withdrawal since June 25, according to data cited by The Block. The funds posted weekly net outflows of $202.6 million for the week ended the same day. The withdrawals coincided with a decline in Bitcoin following reports of a potential security issue at Binance. The cryptocurrency fell 3.2% on Thursday evening to below $79,000, according to an Associated Press report. The concurrence of the price drop and outflows raised questions about the incident’s effect on investors’ appetite for crypto assets.
Outflows also extended to spot Ethereum funds, which recorded net withdrawals of $155.9 million on Friday, their largest since October 7, according to The Block. Weekly outflows from those funds totaled $431.5 million for the week ended October 30. The figures show that pressure extended to major crypto asset products, not just Bitcoin funds. But reading daily flows in isolation from the weekly total could overstate the scale of the pullback; Friday’s outflows offset inflows earlier in the week, according to Glassnode. Its report described weekly flows into Bitcoin funds as broadly flat.
Binance said it estimated the security issue’s total impact at more than $6 billion in an update issued Thursday, October 29, without confirming in that update that funds had been stolen. The company added that about $3 billion of affected assets had been frozen on-chain by the time of the Associated Press report. The figures outlined the scale of the impact disclosed by the company and the steps it said it had taken after the incident. On November 1, Binance announced a phased resumption of withdrawals, setting a window between 06:00 and 09:00 UTC for the first phase to begin. It said withdrawals for the remaining assets and networks would be restored gradually after security and readiness checks were completed.
In the first nine and a half hours after withdrawals began to resume on Sunday, November 1, Binance recorded net outflows of about $3.64 billion, according to a figure the platform provided to The Block. The flow reflects assets moving off the platform after it announced the resumption of withdrawals, as investors continued to monitor developments around the incident. As for the funds, an analyst at Laevitas said the outflow of about $643 million was less than 1% of spot Bitcoin funds’ assets. The analyst described Friday’s move as “risk reduction,” not capitulation or evidence of a loss of institutional confidence. The analyst also said fund holders were not directly exposed to Binance, according to The Block.
EL7 data showed that Bitcoin closed at $77,368.77 on October 30, then at $76,816 on November 2 and $76,923.6 on November 3. A Glassnode report published on October 28 put the short-term holders’ cost basis at $75,800 and the average cost basis of U.S. spot Bitcoin funds at $81,500, based on data through October 27. The report said the price was slightly below the funds’ average cost basis, while remaining above the $77,900 average cost basis of active investors during the two October sell-offs. In an earlier analysis, Glassnode said Bitcoin recorded an hourly close at $80,100 on October 15 before moving back above the funds’ cost basis, and estimated the average cost basis of the companies it tracks at about $80,200. The analysis identified the $85,000 to $87,500 range as an area where sell orders and large liquidation clusters were concentrated, and said a daily close below $80,000 would leave fund holders and treasury companies at an average loss.
In an update issued on November 2, Binance said it had covered about 95% of the affected amount and planned to take an additional proof-of-reserves snapshot on November 4, covering more tokens. It added that preparing the updated zero-knowledge proof after the snapshot could take about 40 to 50 hours. These steps set out the timetable the company announced for completing its proof-of-reserves update after the incident. In the market, EL7 closing data show Bitcoin recovering from its November 2 close to its November 3 close, while remaining below its October 30 close. Fund flows and the path to restoring withdrawals remain indicators of how investors respond in the coming days.