Spot Bitcoin ETFs Shed $1.62B in Four-Day Negative Streak

In brief

• U.S. spot Bitcoin ETFs saw outflows of $1.62 billion across four working days, including a massive $708.7 million exit on Wednesday.
• Bitwise CIO Matt Hougan cites Amberdata figures showing basis trade yields have collapsed to 5%, down from 17% last year.
• Bitcoin’s slide to under $89,000 coincides with a broader risk-off gap down in the S&P 500.

Investors pulled capital from U.S. spot Bitcoin exchange-traded funds on Thursday, marking the fourth successive trading day of outflows amid heightened macroeconomic and geopolitical volatility. The funds shed a net $1.62 billion over four trading days, marking one of the largest and most sustained periods of net redemptions since the ETFs’ inception in early 2024, per SoSoValue data. The streak, which began last Friday, continued through Thursday as the market processed a series of heavy withdrawals. Selling pressure began with a $394.68 million withdrawal last Friday. Following the Monday holiday, outflows accelerated with $483.38 million on Tuesday and a significant $708.71 million on Wednesday. The streak was confirmed Thursday with a further $32.11 million in net redemptions.

Bitcoin basis trade slips Institutional appetite is waning as the yield on the Bitcoin basis trade—a strategy that aims to profit from the difference between the spot price and the futures market—is now below 5%, down from 17% a year ago, according to Amberdata figures cited by Matt Hougan, chief investment officer of Bitwise, who told Decrypt. “When you see sustained outflows across all of the most liquid crypto ETPs it’s usually a sign that hedge funds are pulling back on the basis trade,” Hougan said. He explained that when the trade is less profitable, as it is now, this fast-moving capital exits quickly. “Hedge funds are not the only holders of Bitcoin ETFs at all—I suspect they’re something like 10%-20% of the market—but they move fast and they can overwhelm flows in the short term,” Hougan said. Macro outlook turns risk-off This retreat of fast money has unfolded against a risk-off macro backdrop. The S&P 500 index gapped down nearly 54 points over the weekend, amid a pullback from its all-time high. Bitcoin exhibited similar behavior, failing to sustain momentum above $97,000 and entering a sharp decline.

Bitcoin is currently trading at $89,500, down 5.4% on the week, according to CoinGecko data. Investor sentiment is turning increasingly bearish, with users on prediction market Myriad, owned by Decrypt’s parent company Dastan, assigning a 30% chance Bitcoin could crash to $69,000—up from 11.6% over the past week. Market observers note that an absence of interest from large players at current levels has contributed to the pressure. This matches a broader pullback from risk across institutional portfolios, Jordan Jefferson, founder of Dogecoin app layer DogeOS, told Decrypt. With Bitcoin increasingly becoming a macro asset, its recent drop is a pattern that was noted during previous periods of macro stress, Jefferson said. Market participants are now looking to a shift in macro expectations or trade profitability to reverse the trend. “A stabilization in macro conditions would help, but the more immediate variable is the Fed,” Jefferson said. “Powell’s term ends in May, and who replaces him will matter. A dovish appointment would shift rate expectations and likely bring risk appetite back.” Myriad users currently place just a 5% chance on U.S. President Donald Trump nominating Keving Hassett as the new Fed chair before March, and a 36% chance on the Fed cutting interest rates by more than 25bps before July.

 Hougan added that a return of retail bullishness could make the basis trade attractive again, but the long-term growth of the ETFs depends on “slow money” from financial advisors. “I remain confident we’ll be moving to new all-time highs this year. But this crypto bull market is not going to be like markets past. We’re in a grind now, not a rocket ship!” Hougan said.