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Question #444

What effect did the $357.6 million spot Bitcoin ETF outflows on December 15 have on perceptions of market liquidity?

Category: General
Large ETF outflows reduced available market liquidity heightening concerns over trading flexibility
ETF outflows increased market liquidity boosting confidence in easy asset transactions overall
Spot ETF flows had no real effect on liquidity perceptions most traders
ETF outflows signaled strong buying power rather than liquidity diminution across markets

Why is this the correct answer?

When $357.6 million left spot Bitcoin ETFs, there was less capital dedicated to buying and selling Bitcoin through these products. Reduced ETF liquidity can spill over into spot markets, making it harder for traders to enter or exit positions quickly without affecting price. Beginners should note that large outflows from liquid investment vehicles can signal stress and tighten overall market liquidity.

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