U.S. spot Bitcoin (BTC) exchange-traded funds have shed roughly $8 billion in net outflows since their October all-time high — the largest balance drawdown of the current market cycle — as total holdings fell to approximately 1.26 million BTC and investors now sit on average paper losses of about 20%.
What Happened: Record ETF Drawdown
The decline began after Bitcoin reached its record high of $126,000 in October. Since then, sustained net outflows have dragged ETF balances steadily lower.
$1.6 billion was pulled from spot Bitcoin ETF products in January alone, extending a streak of monthly outflows that started in November 2025. The broader digital asset space has followed a similar pattern: $173 million exited digital asset funds last week, marking four consecutive weeks of redemptions totaling $3.7 billion.
Glassnode data puts the average entry price for U.S. spot Bitcoin ETF investors at approximately $83,980 per BTC. With Bitcoin trading near $67,349 at press time, those holders are underwater by roughly 20%.
In early February, Arthur Hayes argued that institutional dealer hedging activity is amplifying downward pressure on BTC prices. "Institutional de-risking has added structural weight to the ongoing weakness, reinforcing the broader risk-off environment," Glassnode added.
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Why It Matters: Cyclical, Not Structural
Despite the outflows, cumulative net inflows into Bitcoin ETFs still stand at roughly $53 billion, down from a peak of over $63 billion in October 2025, according to Bloomberg senior ETF analyst Eric Balchunas. He noted the scale of adoption remains significant relative to early expectations.
"Our (more bullish than most of our peers) prediction was $5-15b in first year. This is imp context to consider when looking/writing about the $8b in outflows since 45% decline and/or the relationship bt btc and Wall street, which has been overwhelmingly positive," Balchunas said.
The data suggest the current retracement reflects cyclical risk reduction rather than a structural reversal. ETF flows have amplified moves in both directions, embedding Bitcoin more deeply into traditional capital market dynamics.
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