Bitcoin News Today: Institutional Sell-Offs Drive $1.94B Crypto Exodus, Sparking Decentralization Fears

Digital Asset Investment Products Face $1.94 Billion Outflows, Marking Third-Largest Since 2018

Digital asset investment products experienced a significant net outflow of $1.94 billion in the latest week, according to CoinShares, marking the third-largest outflow since 2018. The exodus was driven by declining investor sentiment amid broader market volatility and uncertainty over monetary policy. Bitcoin (BTC-USD) and Ethereum (ETH-USD) ETFs were hit hardest, with Bitcoin ETFs recording $1.38 billion in outflows and Ethereum ETFs losing $689 million—representing 4% of assets under management (AuM), per the report.

The outflows come amid a sharp correction in crypto prices, with Bitcoin and Ethereum down over 30% from their October peaks. James Butterfill, CoinShares' Head of Research, attributed the trend to "monetary policy uncertainty and crypto-native whale sellers," noting that AuM in digital asset ETPs has fallen 27% from their early October high of $264 billion to $191 billion. Smaller tokens like Solana (SOL-USD) and XRP also saw minor outflows, while multi-asset ETPs attracted $69 million in inflows over three weeks.

BlackRock's U.S. spot Bitcoin ETF (IBIT) added to the narrative, posting a record daily net outflow of $355.5 million on November 21, per Farside Investors. The move sparked speculation about shifting institutional sentiment, with traders monitoring whether the outflow signals caution ahead of potential rate cuts or regulatory changes.

The trend has raised alarms in the Ethereum community. Vitalik Buterin, co-founder of Ethereum, warned that growing institutional control—exemplified by BlackRock's Ethereum ETF—poses existential risks to the network's decentralization. He highlighted concerns that institutional dominance could push technical changes favoring high-frequency trading, such as 150-millisecond block times, which could marginalize individual node operators. With nine U.S. ETFs now holding over $18 billion in ETH, Buterin urged developers to prioritize Ethereum's core values of permissionless access and censorship resistance.

Meanwhile, MicroStrategy (MSTR) faces its own crisis as index providers reconsider its eligibility for major benchmarks. JPMorgan warned that exclusion from MSCI indices could trigger up to $2.8 billion in passive outflows, with total losses reaching $8.8 billion if other providers follow suit. The company, which holds 649,870 Bitcoin, has seen its stock price plummet 60% since late 2024, eroding a once-lucrative premium over its net asset value (NAV). MSCI's decision on whether to exclude firms with digital assets exceeding 50% of total assets is due January 15, 2026 per the report.

The broader market remains fragile. Strategy's plight underscores the risks for companies leveraging Bitcoin as a treasury asset, as passive flows—once a lifeline for liquidity—now threaten to become a destabilizing force. Michael Saylor, Strategy's founder, defended the model, calling it a "bitcoin-backed structured finance company," but analysts caution that sustained Bitcoin weakness below $70,000 could force margin calls and dilutive fundraising.

As the crypto market grapples with these challenges, investors are weighing short-term volatility against long-term institutional adoption. While ETF inflows earlier this year bolstered confidence, recent outflows highlight the fragility of momentum in a sector still navigating regulatory and macroeconomic crosscurrents.

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