Crypto Markets Shed $60 Billion as ETF Outflows Signal Cooling Sentiment

Cryptocurrency markets retreated sharply Monday as investors pulled back from risk assets ahead of Federal Reserve Chair Jerome Powell's closely-watched Jackson Hole speech later this week, with the sector losing $60 billion in market capitalization (-0.59%) over 24 hours to $3.88 trillion, per Coinmarketcap data.

Bitcoin dropped to $115,090, down 3.13% over seven days and 0.41% in the past day, breaking below key technical support levels. Ethereum fared worse, falling 1.48% to $4,236 after declining 3.4% from weekly highs as over $190 million in long positions were liquidated.

The sell-off coincided with significant institutional withdrawal from crypto exchange-traded funds. U.S. Bitcoin ETFs recorded $121.7 million in net outflows on Monday, while Ethereum ETFs posted their largest single-day withdrawal since launch with $196.6 million in redemptions, ending a 15-week inflow streak.

The combined $318 million in ETF outflows reflects growing caution as markets await clarity on Federal Reserve monetary policy. Powell's August 22 speech at Jackson Hole is expected to provide guidance on the central bank's approach to interest rate cuts, with markets currently pricing in a 25 basis point reduction in September.

Macroeconomic headwinds have dampened risk appetite across asset classes. The U.S. dollar index has gained 3% since July while rising bond yields have reduced the appeal of non-yielding assets like cryptocurrencies. The crypto Fear & Greed Index fell to 53 (neutral) from 56, indicating shifting sentiment.

Ethereum's decline was amplified by its high correlation with Bitcoin at 0.89 year-to-date. Despite the recent weakness, Ethereum ETF assets under management remain robust at $22.55 billion, up 43% month-over-month, following a 63% rally over the past 90 days.

BRN analysts are watching Bitcoin's ability to hold the $114,000 support level, with further declines potentially triggering additional selling pressure. The market's reaction to Thursday's ETF flow data will provide insight into whether institutional appetite for crypto exposure is cooling or if the recent outflows represent temporary profit-taking.

The pullback comes after both cryptocurrencies reached significant milestones earlier this month, with Bitcoin hitting new all-time highs above $124,000 before the current consolidation phase began.