Bitcoin ETFs Lose $1.16 Billion; Bitwise Sees Short-Term Risk

U.S. spot Bitcoin exchange-traded funds recorded $1.16 billion in net outflows over three trading sessions through Tuesday, according to SoSoValue data. Bitwise attributed the withdrawals to weaker market sentiment rather than a lasting decline in institutional demand.

Investors withdrew about $116 million from the funds on Tuesday, following $399 million in outflows Monday and $643 million Friday. The withdrawals followed a $6.3 billion hack at Binance on Thursday, which weakened sentiment across the crypto market and raised questions about the security of ETF custody arrangements.

“I do think it’s related to a short-term risk-off environment rather than a structural change in institutional sentiment,” André Dragosch, Bitwise’s head of research, said in comments provided to the media.

Dragosch described ETF flows as a combination of long-term institutional adoption and short-term changes in market sentiment. A Bitwise survey of 15 institutions found that none had reduced their Bitcoin ETF exposure during the bear market. U.S. regulatory filings also showed that most institutional investor categories, excluding hedge funds, had largely maintained their positions.

Retail investors hold most Bitcoin ETF assets and tend to respond more sharply to price swings, according to Dragosch. Bitwise’s analysis found that ETF inflows generally track sentiment across the wider crypto market, which weakened after the Binance hack.

Tuesday’s withdrawals were lower than those recorded Monday and Friday. The Crypto Fear & Greed Index rose to 34 from 26 Monday, although it remained in the “Fear” category. Bitcoin traded near $78,000 after gaining about 1.6% over the previous 24 hours, according to CoinGecko.

The latest outflows brought the funds’ net withdrawals for 2026 to about $153 million. The three-session decline extended a withdrawal streak that began Friday.

The Binance incident also raised questions about the concentration of ETF custody among a small number of providers. Dragosch distinguished between the security systems used by crypto exchanges and institutional custodians, noting that the hack affected internet-connected hot wallets rather than cold storage.

“In contrast, institutional funds held at Coinbase Custody are held in cold storage, which, by definition, is not connected to the internet,” Dragosch added.