- Bitcoin ETFs recorded $1.16 billion in outflows over three days, but Bitwise says the selling reflects short-term market uncertainty.
- Institutional investors largely remain committed to Bitcoin despite weakening sentiment and security concerns.
US spot Bitcoin exchange-traded funds (ETFs) have recorded $1.16 billion in net outflows over three trading sessions, raising concerns about weakening investor demand. However, Bitwise says the withdrawals reflect short-term market uncertainty rather than a broader shift away from Bitcoin among institutional investors.
Investors withdrew another $116 million from US spot Bitcoin ETFs on Tuesday, extending the funds’ outflow streak to three consecutive sessions. The latest figure followed $399 million in withdrawals on Monday and $643 million on Friday.
Despite the heavy selling, Bitwise’s head of research, André Dragosch, believes institutional confidence in Bitcoin remains largely intact.
Bitwise Says Bitcoin ETF Selling Is Short-Term
Dragosch attributed the recent withdrawals to a temporary risk-off environment rather than a fundamental change in institutional sentiment.
He explained that ETF flows respond to broader market conditions, with investors often reducing exposure when uncertainty increases.
A recent Bitwise survey of 15 institutions supports this view. According to Dragosch, none of the surveyed institutions had reduced their Bitcoin ETF exposure during the bear market.
US regulatory filings also suggest that most institutional investor categories, excluding hedge funds, have largely maintained their positions.
Dragosch added that retail investors still hold the majority of Bitcoin ETF assets. Unlike institutional investors, retail traders tend to react more strongly to market volatility, which can contribute to sudden changes in fund flows.
Bitcoin ETF Outflows Slow as Market Sentiment Improves
Although withdrawals have exceeded $1 billion since Friday, the pace of selling has started to ease. Tuesday’s $116 million outflow was significantly lower than Monday’s $399 million and Friday’s $643 million. This slowdown suggests that selling pressure may be easing, although the funds remain under pressure.
Market sentiment has also shown some improvement. The Crypto Fear & Greed Index climbed to 34 from 26 on Monday, moving further away from extreme fear. However, the index remains in the fear category.
Bitcoin also gained approximately 1.6% over 24 hours, trading near $78,000 at the time of publication. Despite the recent improvement, US spot Bitcoin ETFs have recorded approximately $153 million in net outflows for 2026.
Binance Hack Raises Questions About Bitcoin ETF Custody
The recent withdrawals followed a $6.3 billion Binance hack on Thursday, which raised concerns about security across the crypto industry.
The incident also renewed questions about the custody arrangements used by spot Bitcoin ETFs, particularly because several major funds rely on a relatively small group of institutional custodians.
However, Dragosch highlighted important differences between exchange security and institutional custody arrangements.
He explained that the Binance incident involved hot wallets, which remain connected to the internet and are more exposed to online attacks.
By comparison, institutional Bitcoin ETF holdings at Coinbase Custody are kept in cold storage, meaning they are not connected to the internet.
This distinction is important because concerns surrounding exchange security do not automatically translate into risks for assets held by regulated institutional custodians.
Institutional Bitcoin Demand Remains in Focus
The latest $1.16 billion withdrawal streak has raised questions about whether institutional demand for Bitcoin is weakening. However, Bitwise believes the recent selling reflects temporary market conditions rather than a lasting change in investment strategy.
The slowdown in daily outflows and improving market sentiment offer some signs of relief. Still, whether Bitcoin ETFs can return to sustained inflows will depend on how investor confidence develops in the coming sessions.
ALSO READ: Solana ETF Outflows Hit Record High as Bearish Signals Put $88.91 Support at Risk
DISCLAIMER:
This article reflects the author’s views and is provided for informational purposes only. While we strive for accuracy, the publisher does not guarantee that all information is complete or current. Readers should verify important information and consult appropriate sources before making decisions based on this content.