US Bitcoin ETFs shed $1.16 billion across three trading sessions

By Daniel Okafor

US spot Bitcoin exchange-traded funds recorded $1.16 billion in net outflows across three trading sessions through Tuesday, according to SoSoValue data, with investors withdrawing another $116 million on Tuesday.

André Dragosch, Bitwise’s head of research, said: “I do think it’s related to a short-term risk-off environment rather than a structural change in institutional sentiment.” He said the redemptions reflected weaker market sentiment rather than a lasting retreat by institutional investors.

The outflows followed Binance’s $6.3 billion hack on Thursday, which raised concern about investor confidence and the security of assets held through ETFs. Dragosch specifically attributed the withdrawals to sentiment, not to fears over the safety of ETF holdings.

How are the ETF flows changing?

Tuesday’s $116 million outflow slowed from $399 million on Monday and $643 million on Friday, extending the funds’ withdrawal streak to three sessions. The pace of redemptions eased each day even as the cumulative total crossed $1 billion.

The latest withdrawals left the funds with approximately $153 million in net outflows for 2026, based on SoSoValue’s figures. The year-to-date figure comes after three consecutive sessions of net redemptions.

Market indicators improved modestly around the same period. The Crypto Fear & Greed Index rose to 34 from 26 on Monday, though it remained in the “Fear” category. Bitcoin gained about 1.6% over the prior 24 hours to trade near $78,000 at publication, CoinGecko said.

Are institutions reducing their exposure?

Dragosch said ETF flows reflect two forces: long-term institutional adoption and shorter-term changes in investor sentiment. A recent Bitwise survey of 15 institutions found that none had reduced their Bitcoin ETF exposure during the bear market.

US regulatory filings also showed that most institutional investor categories, apart from hedge funds, had largely maintained their positions. Retail investors still account for the majority of Bitcoin ETF holdings and tend to react more strongly to market volatility, according to Dragosch.

Bitwise’s analysis found that ETF inflows closely track broader crypto market sentiment, which weakened around the Binance hack. That makes daily flows an imperfect measure of long-term institutional commitment when a security event can alter sentiment quickly.

The divergence makes the outflow data harder to interpret. A $1.16 billion redemption total can coexist with stable long-term allocations, so flow size alone does not establish how many institutions are reducing exposure. The survey and regulatory filings provide a holdings-based counterpoint to the daily sentiment signal.

What does the Binance hack mean for ETF custody?

Some industry observers have raised concerns about crypto ETF custody because major funds rely on a small number of custodians. Dragosch said those concerns should distinguish exchange wallet architecture from the arrangements used for institutional holdings.

The Binance incident affected hot wallets, which connect to the internet. “In contrast, institutional funds held at Coinbase Custody are custodied in cold storage which, by definition, are not connected to the internet,” Dragosch said.

The distinction addresses the mechanism of the cited hack rather than minimizing operational risk. Custodian concentration remains part of the ETF structure, but the wallet architecture used in the incident differs from the cold-storage arrangement described for institutional funds at Coinbase Custody.

The next day’s flow data and subsequent institutional position disclosures will show whether this remains a sentiment-driven withdrawal streak or develops into a structural retreat from Bitcoin ETFs.