A sharp rise in outflows from Spot Bitcoin ETFs has raised questions about institutional confidence in Bitcoin, but market data suggests large investors are not exiting the asset. Bitcoin rebounded 3 percent on Tuesday after briefly slipping to the $85,000 level a day earlier, even as exchange traded fund flows showed renewed selling pressure.
On Monday, spot Bitcoin exchange traded funds recorded $358 million in net outflows, the largest single day withdrawal in more than three weeks. The move followed Bitcoin’s drop below the $90,000 psychological support level and contributed to speculation that institutions may be reducing exposure after the October market correction.
Bitcoin is currently trading about 31 percent below its all time high of $126,219. While such a drawdown often fuels concerns about the end of a bullish cycle, analysts and market participants note that similar corrections have occurred during previous uptrends without signaling a structural shift in demand.
Spot Bitcoin ETFs outflows test sentiment but trends remain stable
The recent weakness in Spot Bitcoin ETFs comes amid broader macro uncertainty. According to analysis shared by X user forcethehabit, the pullback does not indicate a change in Bitcoin’s long term trajectory. Interest rate cuts in the United States have been delayed, and the Federal Reserve has maintained balance sheet reduction longer than expected, both of which have weighed on risk assets.
Institutional capital has largely entered Bitcoin through ETFs and corporate treasury allocations. However, there has been limited rotation into higher risk and less liquid crypto assets, suggesting that institutions are maintaining a cautious but steady approach rather than abandoning Bitcoin altogether.
Bitcoin’s relationship with gold offers additional context. The cryptocurrency has underperformed gold by about 48 percent since July, yet the more relevant metric is how the two assets move week to week. The 60 day correlation between Bitcoin and gold has fluctuated between positive and negative since May, showing no consistent pattern. Importantly, the recent 31 percent price decline did not materially affect this correlation, weakening arguments that institutional investors have fundamentally changed how they view Bitcoin’s risk profile.
Despite disappointment among traders following the rejection near $110,000, Bitcoin continues to outperform traditional benchmarks. Over the past 18 months, Bitcoin has exceeded the S&P 500 by roughly 7 percent. While the margin appears modest, it reinforces the view that Bitcoin remains competitive with major equity indices during periods of market stress.
Options market data also supports this assessment. Bitcoin’s implied volatility peaked at 53 percent in November, a level comparable to stocks such as Tesla. Elevated implied volatility reflects higher option premiums and expectations of price swings, but it does not necessarily signal bearish positioning. Market makers often reduce exposure during volatile periods as a risk management measure rather than a directional bet.
At present, there is no clear evidence that institutional investors have abandoned expectations for Bitcoin to approach the $100,000 level. Correlation metrics and volatility trends suggest Bitcoin’s price behavior remains largely unchanged despite recent pressure. A few days of net outflows from Spot Bitcoin ETFs appear insufficient to define a broader trend, particularly as the effects of recent liquidity conditions from the US Federal Reserve have yet to fully flow through financial markets.
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