Bitcoin ETFs recorded outflows throughout seven of eight main selloffs, difficult expectations that Wall Avenue traders would help costs throughout downturns.
A brand new DWF Labs report shared with mycryptopot discovered that US spot Bitcoin exchange-traded funds constantly misplaced cash throughout market declines of no less than 15% since their January 2024 launch, whereas attracting inflows all through all 9 main rallies.
The findings problem the idea that institutional adoption has created a reliable supply of shopping for throughout market stress. Additionally they expose a paradox in Bitcoin’s altering market construction: selloffs have develop into slower and fewer frequent, whilst ETF traders proceed withdrawing billions throughout downturns.
The analysis, masking 694 buying and selling days by means of Oct. 16, discovered that traders withdrew a document $8.2 billion throughout Bitcoin’s 28.8% decline between Might and June 2026. That adopted $6.9 billion in withdrawals in the course of the October 2025 to February 2026 downturn, when the cryptocurrency misplaced almost half its worth.
The 2 episodes represented the biggest ETF withdrawals because the merchandise launched, surpassing the $3.4 billion traders redeemed in the course of the January-April 2025 correction.
Wall Avenue traders are shopping for Bitcoin rallies and promoting crashes
DWF Labs discovered that ETF traders have been nonetheless withdrawing cash at seven of eight market bottoms and buying at seven of eight peaks, suggesting institutional flows have largely strengthened present worth traits.
The promoting ceaselessly intensified as downturns progressed. In 5 of the eight corrections, the heaviest withdrawals occurred in the course of the closing 5 buying and selling days earlier than Bitcoin bottomed.
In the course of the Might-June 2026 decline, outflows averaged $412 million every day within the closing week, whereas traders withdrew cash on 88% of buying and selling days all through the correction.
The sample reversed throughout recoveries, with all 9 rallies of no less than 15% attracting internet inflows. Seven recorded their strongest shopping for in the course of the closing 5 periods earlier than the market peaked.
One notable exception emerged in the course of the Might-July 2024 correction, when ETFs attracted $2.2 billion regardless of Bitcoin falling 21.8%. That decline coincided with promoting stress from German authorities liquidations and Mt. Gox creditor repayments, permitting ETF demand to soak up a few of the extra provide.
In any other case, institutional traders have usually waited for recoveries to develop into established earlier than returning.
Throughout Bitcoin’s April 2025 rebound, ETFs continued shedding a median of $40 million every day even because the cryptocurrency gained 9.7%. Inflows subsequently accelerated to $436 million a day after costs had already recovered.
Conversely, one of many largest ETF influx days, totaling roughly $1.2 billion, coincided with Bitcoin’s October 2025 peak, shortly earlier than a protracted decline.
Bitcoin ETF flows comply with costs as a substitute of predicting them
The analysis discovered that ETF flows correlated 0.54 with Bitcoin’s efficiency over the previous 5 buying and selling days, in contrast with simply 0.03 for returns over the next 5 days.
Their correlation with same-day returns was 0.41, suggesting flows and costs usually transfer collectively with out indicating whether or not fund demand drove the transfer.
This weakens the usefulness of ETF inflows as a forward-looking market sign, regardless of their rising prominence in institutional Bitcoin evaluation.
After the biggest 10% of influx periods, Bitcoin appreciated over the next 20 days solely 51% of the time, in contrast with 57% throughout all buying and selling days.
BlackRock’s iShares Bitcoin Belief (IBIT), the market’s largest Bitcoin ETF product, supplied little extra predictive benefit regardless of accumulating $65.6 billion in internet inflows in the course of the research interval.
Its flows correlated solely 0.04 with Bitcoin’s subsequent five-day returns. Following its largest influx periods, Bitcoin superior over the following 20 days in solely 47% of instances.
The findings additionally complicate the idea that giant ETF purchases essentially sign recent bullish positioning.
Some exercise displays traders transferring cash between competing funds, whereas hedge funds can concurrently purchase ETF shares and quick Bitcoin futures to seize pricing variations with out betting on the cryptocurrency’s route.
DWF Labs nonetheless recognized one uncommon sample price consideration.
When ETFs skilled unusually giant withdrawals on days Bitcoin moved lower than 1%, the cryptocurrency subsequently declined over 20 days in eight of 12 instances.
Returns following these periods have been 10.7% weaker than on days with comparable previous worth traits. Nonetheless, the detrimental outcomes have been concentrated round three main selloffs, limiting the sample’s reliability as a buying and selling sign.
Bitcoin crashes have slowed regardless of persistent ETF promoting
Though institutional traders have repeatedly withdrawn cash throughout corrections, Bitcoin’s broader market habits has modified significantly since ETFs started buying and selling.
The median selloff has unfolded at a every day tempo of 0.69%, in contrast with 1% throughout 2022-2023 and 1.37% in 2021.
Main corrections of no less than 15% have develop into much less frequent, declining to about 2.9 yearly from 4.4 in 2022-2023 and eight in 2021.
Annualized volatility has additionally fallen to 47% from 55% in 2022-2023, whereas the annual frequency of roughly 7% every day crashes has dropped from six to 2.
Nonetheless, corrections have remained substantial. The median ETF-era downturn was 21.3%, in contrast with 19.4% throughout 2022-2023.
DWF Labs recognized deeper liquidity, a broader investor base and higher entry to regulated hedging devices, together with CME futures and ETF choices, as potential contributors to the market’s altering habits. Bitcoin’s volatility was already declining earlier than the ETFs launched.
Hedge funds’ positioning offers one other indication of how the institutional market has advanced.
DWF Labs estimated that roughly one-fifth of ETF flows could have been hedged by means of CME futures foundation trades. Leveraged funds’ internet quick publicity has since declined from roughly 116,000 BTC in December 2024 to 29,000 BTC.
The agency estimated that unwinding these positions might clarify a lot of the ETF promoting in the course of the January-April 2025 correction, however not more than roughly 1 / 4 of withdrawals in the course of the two largest subsequent declines.
That implies a bigger share of current outflows mirrored traders actively lowering Bitcoin publicity.
The report additionally recognized a possible threshold for renewed promoting. As soon as Bitcoin fell 7% under its 20-day excessive, common every day ETF flows shifted from $74 million in inflows to $72 million in outflows over the next 5 buying and selling days.
Promoting intensified in 19 of the 24 episodes examined, although flows sometimes returned to impartial ranges over the following two weeks.
The discovering comes as Bitcoin ETFs have pulled in $57.96 billion in cumulative internet inflows, with the 12 merchandise managing round $110 billion in belongings.
