US Spot Bitcoin ETFs Experience Record $938M Outflow Amid Price Struggles

U.S. spot Bitcoin exchange-traded funds (ETFs) have witnessed their largest-ever daily outflows, totaling nearly $938 million, as Bitcoin’s price continues to face downward pressure, struggling to maintain its recent rally.

According to CoinGlass data, the 11 Bitcoin ETFs in the U.S. collectively experienced a net outflow of $937.9 million on February 25. This marks the sixth consecutive day of outflows, further highlighting the growing concerns in the market as Bitcoin’s price struggles to stay above key levels. On the same day, Bitcoin dropped 3.4%, falling to a 24-hour low of $86,140, after reaching an intraday high of over $92,000.

Among the hardest hit was the Fidelity Wise Origin Bitcoin Fund (FBTC), which saw a record $344.7 million in outflows, marking the largest single-day loss for the ETF. BlackRock’s iShares Bitcoin Trust (IBIT) was also hit hard, with outflows of $164.4 million. Other major ETFs saw significant losses as well, including the Bitwise Bitcoin ETF (BITB), which lost $88.3 million, and Grayscale’s two funds, which together lost $151.9 million—$66.1 million from its Grayscale Bitcoin Trust (GBTC) and $85.8 million from its Bitcoin Mini Trust ETF (BTC).

February has proven to be a challenging month for Bitcoin ETFs, with over $2.4 billion in net outflows so far. This has occurred despite only four days of net inflows during the month, underscoring the broader skepticism and volatility surrounding the digital asset market.

Nate Geraci, President of the ETF Store, expressed his disbelief at the ongoing negative sentiment toward Bitcoin and crypto within traditional finance. In a post on X (formerly Twitter) on February 26, Geraci commented, “Huge victory laps at every downturn... Hate to break it to you, but no matter how big drawdowns are, it’s not going away.”

Industry analysts and experts, such as BitMEX co-founder Arthur Hayes and 10x Research head Markus Thielen, have pointed out that much of the outflow from Bitcoin ETFs is driven by hedge funds, rather than long-term Bitcoin investors. These funds often engage in arbitrage strategies, seeking short-term yield rather than betting on Bitcoin’s long-term appreciation.

Hayes, on February 24, predicted that Bitcoin’s price could drop to $70,000 if the outflows from spot ETFs continue. He explained that hedge funds holding IBIT positions typically go long on the ETF while simultaneously shorting CME Bitcoin futures to capture a yield higher than what is available from short-term U.S. Treasuries. However, when the yield from this strategy decreases due to falling Bitcoin prices, these funds are likely to unwind their IBIT positions, which could exacerbate the downward pressure on Bitcoin’s price.

Thielen’s research also supports this view, revealing that more than half of the investors in spot Bitcoin ETFs are involved in the ETF arbitrage game. According to Thielen, the process of unwinding these positions is "market-neutral," as it involves selling the ETFs while simultaneously buying Bitcoin futures, which effectively neutralizes any directional impact on the broader market.

As Bitcoin continues to face headwinds, the outflows from spot Bitcoin ETFs suggest that investor sentiment remains cautious, particularly among those looking for short-term gains rather than long-term exposure to the cryptocurrency.