According to Woofun AI, the cryptocurrency market continues to decline, with U.S. spot Bitcoin ETFs and spot Ethereum ETFs experiencing their most severe outflows in months.

SoSoValue data shows this phenomenon signals a sharp escalation of risk-aversion sentiment among institutional funds toward mainstream crypto assets, with market liquidity rapidly contracting.

On October 7, the 12 listed Bitcoin ETFs in the U.S. market collectively lost $484.9 million, marking the largest single-day outflow since June 25.

BlackRock (BLK.US)'s iShares Bitcoin Trust (IBIT.US) recorded the largest outflow at $207.7 million, followed by Fidelity (FBTC.US)'s FBTC with $105.1 million in outflows, while ARK 21Shares (ARKB.US)'s ARKB saw $101.7 million flow out.

Meanwhile, Ethereum ETFs also saw outflows of $160.9 million, bringing the total losses over five trading days to $506.3 million, the highest level since January of this year.

BlackRock (BLK.US)'s ETHA (ETHA.US) accounted for $116.1 million of Wednesday's redemption activity, while Grayscale's ETHE (ETHE.US) lost $25.8 million.

These funds have now seen outflows for seven consecutive trading days, with cumulative outflows amounting to approximately $569 million.

On Wednesday alone, the two categories of ETFs combined lost approximately $646 million — at a time when Bitcoin's closing price fell to its lowest level in the past 20 days, below $83,000, while Ethereum's price retreated to around $2,500.

Notably, this price action coincided with rising U.S. Treasury bond yields, a strengthening dollar, and rising oil prices, further intensifying pressure on risk assets.

Signs of the outflows had already emerged earlier, with Bitfinex analysts noting weakening institutional demand before Wednesday's market decline.

In an October 7 report, these analysts pointed out that Bitcoin ETF fund flows had become increasingly unstable, with investment momentum slowing sharply after the buying surge that drove prices higher in September.

During the period when Bitcoin's price rose from $76,000 to $87,000 in mid-September, daily net inflows averaged $341.7 million.

However, in the five trading days before October 6, this figure dropped to approximately $35 million per day, with cumulative net inflows over the five days totaling just $172.9 million.

Data compiled by Woofun AI shows that remaining demand was also highly concentrated in BlackRock (BLK.US)'s IBIT (IBIT.US), which attracted $536.2 million in inflows over those five days, while other competing Bitcoin ETFs collectively lost $363.3 million.

This divergence has made the market increasingly reliant on a single fund to offset redemption pressure elsewhere, and when IBIT also joined the sell-off on Wednesday, this supporting force weakened accordingly.

The reason for this reversal is that Bitcoin's current price has fallen below the average cost basis of ETF investors.

Bitfinex calculated a flow-weighted average ETF cost of $84,318.

Analysts observed that typically when Bitcoin's price approaches investors' overall break-even point, daily net inflows drop to around $65 million.

Bitcoin's closing price falling below $83,000 on Wednesday means its price has dropped below this threshold, increasing the possibility that further declines could trigger more investor redemptions to control losses.

Although this figure does not reflect individual investors' purchase prices, it can indicate the profitability of capital invested through these ETFs.

Ethereum has also shown signs of weakening demand.

In addition to continuous ETF outflows, CryptoSlate previously reported that short demand is increasing in the derivatives market, with traders holding short positions paying long holders through negative perpetual contract funding rates.

This positioning indicates that bearish traders are increasingly willing to bear costs to maintain their positions while waiting for further price declines, which also exacerbates the redemption pressure facing Ethereum ETFs.

Bitfinex also warned that reduced institutional capital inflows have made the broader altcoin market increasingly dependent on capital rotating between existing cryptocurrency positions.

If Bitcoin's downward momentum accelerates, investors trying to reduce risk may withdraw capital from altcoins rather than rotating funds into other digital assets, leaving smaller tokens exposed to greater risk.