Bitcoin ETFs experienced significant outflows during the Christmas week, shedding light on the current state of institutional demand. Data from SoSoValue indicated that investors pulled a staggering $782 million from spot Bitcoin exchange-traded funds (ETFs) over the holiday period. The most notable single-day exit occurred on Friday, with $276 million leaving these funds. This trend highlights a critical phase for institutional engagement in the crypto sector.
BlackRock’s IBIT led the outflow charge, losing nearly $193 million, followed by Fidelity’s FBTC, which saw $74 million withdrawn. Grayscale’s GBTC also registered continued modest redemptions. By the end of the week, total net assets across US-listed spot Bitcoin ETFs had fallen to approximately $113.5 billion, a noticeable drop from early December’s peak of over $120 billion. Despite this, Bitcoin prices remained stable, hovering around the $87,000 mark.
Bitcoin ETFs and Institutional Demand: A Temporary Shift?
The recent six-day streak of net outflows marks the longest withdrawal phase since early autumn, with total outflows surpassing $1.1 billion. However, Vincent Liu, the chief investment officer at Kronos Research, suggests these outflows are likely temporary. Liu attributes the dip to “holiday positioning” and reduced liquidity rather than a collapse in underlying demand. He anticipates that institutional flows will return and stabilize as the new year begins.
Looking forward, Liu believes that a potential shift toward Federal Reserve easing in 2026 could further bolster ETF demand. Current rate markets already hint at 75 to 100 basis points of cuts, signaling an easing momentum that could rejuvenate institutional interest.
Institutional Demand Cooldown: A Broader Crypto Signal?
A report from Glassnode supports the notion of cooling institutional demand. It notes that both Bitcoin and Ether ETFs have entered a prolonged outflow phase, indicating that large investors are pulling back from crypto exposure. Since early November, the 30-day moving average of net flows into US spot Bitcoin and Ether (ETH) ETFs has remained negative, reflecting restrained participation amid tightening market liquidity.
As ETFs often serve as a proxy for institutional sentiment, these extended outflows suggest a shift away from crypto among large allocators after a year in which institutions were key market drivers.
In conclusion, while the recent outflows from Bitcoin ETFs may be temporary, they provide a window into the current mindset of institutional investors. With potential Federal Reserve easing on the horizon and evolving crypto infrastructure, the landscape for Bitcoin ETFs and institutional demand may soon see a positive shift.
