Bitcoin (BTC-USD) spot exchange-traded funds (ETFs) in the US have seen significant outflows since the beginning of October, breaking over a week of steady inflows and contributing to the recent decline in the digital asset's price.

Bitcoin fell over 2% on Thursday to $60,269.91 (£45,945.86)

On Wednesday, US spot bitcoin ETFs experienced net outflows of $52.9m. This included selling from BlackRock's (BLK) iShares Bitcoin Trust (IBIT), marking the first time the world’s largest fund manager has reduced its ETF holdings in many weeks.

Tuesday saw the largest single-day sell-off for spot bitcoin ETFs since 3 September, with total outflows hitting $242.6m, signalling a shift in investor sentiment, according to data from Farside Investors.

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Total net assets held by all US spot bitcoin ETFs stood at $55.85bn on Thursday, representing 4.64% of bitcoin's total market capitalisation.

Spot bitcoin ETFs operate like traditional ETFs but specifically track the real-time price of bitcoin. These financial products invest directly in bitcoin as the underlying asset and were approved by the US Securities and Exchange Commission (SEC) in January.

Geopolitical tensions shake markets

Bitcoin also faced pressure from external macroeconomic factors, losing as much as 6% on Tuesday amid escalating tensions in the Middle East, where Iran fired more than 180 ballistic missiles at Israel in response to Israeli attacks on Hezbollah positions in southern Lebanon.

This geopolitical flare-up shook global markets, contributing to bitcoin's drop to a low of $60,300 — wiping out nearly all gains since the US Federal Reserve's interest rate cut on 18 September.

However, since Tuesday’s sell-off, bitcoin posted a slight recovery from the $60,000 support level, climbing back above $61,100 and stabilising to trade mostly flat over the past 24 hours.

Despite broader market uncertainty, on-chain data suggests renewed optimism among large bitcoin holders.

Whale accumulation points to potential bull run

Whales — large holders of bitcoin — have been increasing their accumulation of the cryptocurrency amid the recent downturn, raising expectations of a future bull run, despite the overall sluggish market performance since the beginning of October, according to on-chain data from CryptoQuant.

"Look at how fiercely the new whales are stacking bitcoin, this market has never seen such accumulation," CryptoQuant founder Ki Young-Ju said in a post on X.

He added that these large bitcoin holders are focusing on purchasing actual bitcoin in the spot market and making over-the-counter (OTC) deals directly with other major traders, rather than speculating on future price movements through futures contracts, remaining unconcerned about short-term price volatility.

Volatility mars the start of 'Uptober'

Bitcoin's recent volatile performance casts doubt on the prospects for "Uptober," the nickname the crypto community has given to October, which historically has tended to be a strong month for bitcoin.

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Bitcoin ended September with a positive monthly return, and historically, a strong September has frequently paved the way for gains in the final quarter of the year. Since 2013, bitcoin has only posted negative returns in October twice — once in 2014 and again in 2018, according to Coinglass data.

Analysts remain hopeful, with several pointing to favourable macroeconomic conditions that could reignite risk-on sentiment in the coming weeks.

"Middle East geopolitics could steal the limelight for now, but the shallow sell-off after the intensification of the conflict suggests that the market remains well bid for risk assets, and this minor setback shouldn't distract from the bigger picture," QCP Capital analysts said in a report on Wednesday.

"The flush of liquidity from the People's Bank of China and potential fiscal support will likely support asset prices in China, with bullish sentiment potentially spilling over globally to support risk assets, including crypto."

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