US spot Bitcoin ETFs have entered their deepest withdrawal phase of the current cycle, with balances down about 100,300 BTC since the October peak. The headline signal is institutional de-risking showing up as inventory reduction, not just price volatility. Total holdings sit near 1.26 million BTC, and flow data show redemptions have been steady enough to force funds to sell underlying coins. Bitcoin itself has slid from roughly $126,000 to about $67,349, turning ETF positioning into a stress test for conviction and liquidity management. SoSoValue says about $1.6 billion left in January, extending outflows monthly.
Flow Mechanics and What Comes Next
SoSoValue’s tracking shows the withdrawals became a monthly theme starting in November 2025, with about $1.6 billion leaving in January alone, forcing funds to reduce coin exposure. The mechanics are straightforward: redemptions translate into spot selling when custodial balances must match shares outstanding. Glassnode noted that during the run-up many traders treated spot ETFs as a durable tailwind, but the same plumbing works in reverse during de-risking. In early February, Arthur Hayes also pointed to dealer hedging from big institutions as another source of downside pressure. That dynamic tightens liquidity just as sentiment turns risk-off.
The balance drawdown is also showing up in investor PnL. With an average ETF cost basis near $83,980, this cohort is sitting on roughly 20% unrealized losses at $67,349. That weakens willingness to add risk and can make rallies more supply-heavy as participants seek to reduce exposure on bounces. The report said selling is not confined to these products: about $173 million left crypto funds last week, marking four straight weeks of redemptions. Over that period, withdrawals totaled roughly $3.7 billion, reinforcing a cautious posture. Glassnode said institutional de-risking is strengthening the wider risk-off mood.
Still, the cycle picture is not being framed as a full reversal. Cumulative net inflows remain near $53 billion, down from a $63 billion peak in October 2025, implying retrenchment rather than abandonment. Bloomberg ETF analyst Eric Balchunas argued context matters, pointing to roughly $8 billion in outflows that followed a 45% price drop and describing Bitcoin’s Wall Street linkage as mostly positive overall. He also noted his team’s first-year inflow forecast of $5 billion to $15 billion was above peers. The message: risk is being trimmed, not rewritten. Holdings may stabilize if confidence rebuilds.
