Bitcoin ETF sees $1.16 billion in outflows; Bitwise calls the selling off a "short-term" phenomenon
Andr of Bitwise attributes the outflow of Bitcoin ETF funds to weakening market sentiment and indicates that institutional investors have generally maintained their positions.
The US spot Bitcoin exchange-traded fund (ETF) recorded a net outflow of over $1 billion in three trading days, but the crypto asset management company (Bitwise) stated that these withdrawals do not indicate that institutional investors are continuously pulling out.
According to SoSoValue data, investors withdrew another $116 million from these funds on Tuesday, bringing the total net outflow since last Friday to $1.16 billion.
Bitwise Research Supervisor Andr said to Dragosch and Cointelegraph: "I truly believe that this is related to the short-term risk-aversion environment, rather than a structural change in institutional sentiment."
These capital outflows occurred after Binance suffered a $6.3 billion hacker attack on Thursday, an incident that sparked concerns in the market regarding investor confidence and the security of ETF custody.
Dragosch indicates that the outflow of funds is more due to a weakening market sentiment, rather than concerns about the safety of holding ETF.
Institutions are still holding it.
Dragosch indicates that the ETF capital flow reflects both the long-term trends adopted by institutions and the short-term changes in investor sentiment.
He mentioned that a recent survey conducted by Bitwise on 15 institutions showed that during the bear market, none of these institutions reduced their exposure to Bitcoin ETF. US regulatory filings also indicate that, apart from hedge funds, most categories of institutional investors largely maintained their positions.
According to Dragosch, retail investors still make up the majority of Bitcoin ETF holdings, and they usually react more strongly to market fluctuations.
He said that the analysis by Bitwise found that the capital flow of ETF is closely related to the sentiment of the broader crypto market, and this sentiment weakened before and after the Binance hack incident.
As sentiment towards Bitcoin improves, the outflow of funds has slowed down.
On Tuesday, there was an outflow of $116 million, which is a slowdown compared to $399 million on Monday and $643 million last Friday. This also extended the consecutive days of outflows for these funds to three trading days.
The Fear and Greed Index rose from 26 on Monday to 34, but it is still in the “fear” range. According to CoinGecko data, as of press time, Bitcoin has risen by about 1.6% in the past 24 hours, trading at around $78,000.
The latest round of capital withdrawals resulted in a total net outflow of approximately $153 million for these funds in 2026.
Binance being hacked raises doubts about ETF custody
The hack incident involving Binance has raised concerns among some industry observers regarding the custody of cryptocurrencies ETF, especially since large funds rely on a limited number of custodian institutions.
Dragosch pointed out that there are differences in the security arrangements adopted by crypto exchanges and institutional custodians, and stated that the Binance incident affected hot wallets—i.e., wallets connected to the internet—rather than cold wallets.
Dragosch indicates that, in contrast, the institutional fund assets hosted on Coinbase Custody are stored in cold storage, which by definition is not connected to the internet.
