Bitwise Attributes $1.16B Bitcoin ETF Withdrawals to Temporary Market Conditions
Three consecutive trading sessions saw American spot Bitcoin ETFs experience $1.16 billion in net withdrawals, though Bitwise maintains that institutional participants continue to hold their positions.
American spot Bitcoin exchange-traded funds (ETFs) experienced over $1 billion in net withdrawals across three consecutive trading sessions, though cryptocurrency asset manager Bitwise maintains that these outflows don't indicate a permanent pullback by institutional market participants.
The funds saw an additional $116 million withdrawn by investors on Tuesday, pushing total net outflows to $1.16 billion since Friday, based on data from SoSoValue.
"I do think it's related to a short-term risk-off environment rather than a structural change in institutional sentiment," Bitwise's head of research, André Dragosch, told Cointelegraph.
The outflows came in the wake of Thursday's $6.3 billion Binance hack, which sparked concerns regarding investor confidence and the security of ETF custody arrangements.
According to Dragosch, the outflows stemmed from diminished market sentiment rather than anxieties about the security of ETF holdings.
Institutions are holding on
According to Dragosch, ETF flows represent both sustained institutional adoption over the long term and more temporary shifts in investor sentiment.
He referenced a recent survey conducted by Bitwise involving 15 institutions, none of which had decreased their Bitcoin ETF exposure throughout the bear market. Additionally, US regulatory filings demonstrated that the majority of institutional investor categories, with the exception of hedge funds, had mostly maintained their holdings.
According to Dragosch, retail investors continue to represent the majority of Bitcoin ETF holdings and demonstrate a tendency to respond more dramatically to market volatility.
According to Bitwise's analysis, ETF inflows closely followed broader cryptocurrency market sentiment, which deteriorated following the Binance hack, Dragosch explained.
Outflows slow as Bitcoin sentiment improves
The $116 million in outflows recorded on Tuesday represented a deceleration from the $399 million withdrawn on Monday and the $643 million on Friday, pushing the funds' withdrawal streak to three consecutive trading sessions.
The Crypto Fear & Greed Index climbed to 34 from Monday's reading of 26, although it stayed within the "Fear" category. Bitcoin experienced approximately 1.6% growth over the previous 24 hours, trading around $78,000 at the time of publication, based on CoinGecko data.
These most recent withdrawals pushed the funds' total net outflows for 2026 to roughly $153 million.
Binance hack raises questions about ETF custody
The Binance security breach has prompted concerns among certain industry observers regarding crypto ETF custody practices, especially given that major funds depend on a limited number of custodians.
Dragosch highlighted the distinctions between security protocols employed by cryptocurrency exchanges and those used by institutional custodians, emphasizing that the Binance incident impacted hot wallets, which maintain internet connectivity, as opposed to cold wallets.
"In contrast, institutional funds held at Coinbase custody are custodied in cold storage which, by definition, are not connected to the internet,"
André Dragosch, Bitwise