U.S. spot Bitcoin exchange-traded funds lost $484.9 million in a single day on Wednesday, Oct. 7, the worst outflow since June 25, according to Decrypt's ETF tracker. BlackRock's IBIT, the largest spot Bitcoin fund by assets, took the biggest hit at $207.7 million, with Fidelity's FBTC next in line at $105.1 million. Spot Bitcoin ETFs, which the Securities and Exchange Commission approved in January 2024, hold Bitcoin directly rather than futures contracts, which is why their daily flows are widely read as a gauge of institutional demand for the asset itself.

That one session erased roughly 81% of everything that had flowed in over the previous nine sessions, meaning about two weeks of patient buying went out the door in a day. The funds still sit on $57.8 billion in cumulative net inflows (total money in minus total money out since launch), however, so while it was a very bad day for the ETFs, it was not exactly a bank run.

The culprit has little to do with crypto itself and is likely far more related to the macroeconomic backdrop. The 30-year Treasury yield climbed to about 5.7% on Wednesday, its highest level since 2002, while Brent crude settled around $100 a barrel and stocks slid from record highs. Ship attacks around the Strait of Hormuz keep piling up—at least one a day since Oct. 2—and each one is another reason for oil to stay expensive.

What does that mean for Bitcoin investors? Expensive oil feeds inflation, inflation keeps the Federal Reserve hawkish, and a hawkish Fed keeps bond yields high. That gets awkward for an asset that pays no interest: why hold Bitcoin through an ETF when a 10-year Treasury yields more than 5% and doesn't lose 6% in a few days? That is the math institutions and big-money investors run regularly, and those calculations move the market.

The Fed raised rates in September for the first time since 2023, and the minutes from its most recent meeting, released Wednesday, show most officials expect another hike before year end. Traders, though, remain skeptical of another increase: an October move looks unlikely based onME FedWatch odds and prediction markets. CME currently prices the odds of a Fed hike in October at 19.4%, while Myriad gives a hike a 17% chance.

Away from Wall Street, Bitcoin slid as low as $81,749.83 on Thursday, about 6% below the $86,978 peak it hit earlier in the week. The slide came one day after the ETF outflows. Longs in the derivatives market took the brunt of it: roughly $429 million in positions were liquidated over 24 hours—forcibly closed when margin could no longer cover losses—with 87.5% of them long bets, according to CoinGlass.

October's losses mark a break from seasonal history. Bitcoin had risen in October six years running until last year, when it fell 3.69% and snapped the streak. This year, the funds opened October with $321.6 million of inflows over four sessions, but that early strength faded quickly: they are now $163.3 million in the red through Oct. 7, with Halloween still 23 days away and plenty of time for the monthly tally to change.

The Fed meets next on Oct. 27-28 and again on Dec. 8-9, and the September minutes set no date for the next increase.