Bitcoin ETFs Experience Significant Outflows
Bitwise’s André Dragosch attributed Bitcoin ETF outflows to weaker market sentiment, emphasizing that institutions maintain their exposure. US spot Bitcoin ETFs saw over $1 billion in net outflows over three trading days, with $116 million alone on Tuesday, according to SoSoValue data.
"I do think it’s related to a short-term risk-off environment rather than a structural change in institutional sentiment," Dragosch stated.
The outflows followed Binance’s $6.3 billion hack on Thursday, raising concerns about investor confidence and ETF custody security. However, Dragosch blamed the outflows on weaker market sentiment rather than safety concerns regarding ETF holdings.
Institutions Hold Steady
Dragosch noted that ETF flows reflect both long-term institutional adoption and short-term sentiment shifts. A recent Bitwise survey of 15 institutions revealed none had reduced their Bitcoin ETF exposure during the bear market, and US regulatory filings showed most institutional categories maintained their positions.
Retail investors, who hold the majority of Bitcoin ETF shares, tend to react more strongly to market volatility, according to Dragosch. Bitwise’s analysis indicates that ETF inflows track broader crypto market sentiment, which weakened around the Binance hack.
Outflows Slow as Bitcoin Sentiment Improves
Tuesday’s $116 million in outflows marked a slowdown from Monday’s $399 million and Friday’s $643 million, extending the funds’ withdrawal streak to three trading sessions. The Crypto Fear & Greed Index improved to 34 from 26 on Monday, though it remained in the "Fear" category. Bitcoin gained about 1.6% over the past 24 hours, trading near $78,000 at publication, per CoinGecko.
The latest outflows brought the funds’ net outflows for 2026 to approximately $153 million.
Binance Hack Raises Custody Concerns
The Binance hack has sparked questions about crypto ETF custody, especially given major funds rely on a small number of custodians. Dragosch pointed out differences between crypto exchange and institutional custodian security arrangements, noting the Binance incident involved hot wallets connected to the internet, while institutional funds held at Coinbase custody are stored in cold storage, not connected to the internet.
Wall Street killed Bitcoin’s wild rallies, according to 10x’s Markus Thielen in a recent magazine article.