Bitcoin ETFs sold through 7 of 8 crashes even as Wall Street makes BTC selloffs less violent
US spot Bitcoin ETFs recorded outflows during seven of eight major market selloffs since their January 2024 launch, challenging expectations that institutional investors would support prices during downturns.
The research, covering 694 trading days through Oct. 16, found that investors withdrew a record $8.2 billion during Bitcoin's 28.8% decline between May and June 2026. That followed $6.9 billion in withdrawals during the October 2025 to February 2026 downturn, when the cryptocurrency lost nearly half its value.
The two episodes represented the largest ETF withdrawals since the products launched, surpassing the $3.4 billion investors redeemed during the January-April 2025 correction.
Wall Street buys rallies, sells crashes
DWF Labs found that ETF investors were still withdrawing money at seven of eight market bottoms and purchasing at seven of eight peaks, suggesting institutional flows have largely reinforced existing price trends.
The selling frequently intensified as downturns progressed. In five of the eight corrections, the heaviest withdrawals occurred during the final five trading days before Bitcoin bottomed.
During the May-June 2026 decline, outflows averaged $412 million daily in the final week, while investors withdrew money on 88% of trading days throughout the correction.
The pattern reversed during recoveries, with all nine rallies of at least 15% attracting net inflows. Seven recorded their strongest buying during the final five sessions before the market peaked.
ETF flows follow prices, don't predict them
The research found that ETF flows correlated 0.54 with Bitcoin's performance over the preceding five trading days, compared with just 0.03 for returns over the following five days.
Their correlation with same-day returns was 0.41, suggesting flows and prices often move together without indicating whether fund demand drove the move.
BlackRock's iShares Bitcoin Trust (IBIT), the market's largest Bitcoin ETF product, offered little additional predictive advantage despite accumulating $65.6 billion in net inflows during the study period.
Crashes slowed despite persistent selling
Although institutional investors have repeatedly withdrawn money during corrections, Bitcoin's broader market behavior has changed considerably since ETFs began trading.
The median selloff has unfolded at a daily pace of 0.69%, compared with 1% during 2022-2023 and 1.37% in 2021. Major corrections of at least 15% have become less frequent, declining to about 2.9 annually from 4.4 in 2022-2023 and 8 in 2021.
Annualized volatility has also fallen to 47% from 55% in 2022-2023, while the annual frequency of roughly 7% daily crashes has dropped from six to two.
The report also identified a potential threshold for renewed selling. Once Bitcoin fell 7% below its 20-day high, average daily ETF flows shifted from $74 million in inflows to $72 million in outflows over the following five trading days.
Related
